qiiitable 
\xchange 
vste/m. 


By  Alfred  A'.  Justice. 


AN  EQUITABLE 
EXCHANGE  SYSTEM. 


ALFRED  R.  JUSTICE. 


^Ijilat!tlyl}ia: 
ALFRED    J.     FERRIS, 

1S9S. 


0  '        .'    » 


COPYRIGHT,    1898,    BY   ALFRED    R.    JUSTICE. 


f;  PREFACE. 

In  the  consideration  of  nearly  all 
economic  questions,  we  are  met  at 
the  very  threshold   with  confusion  and 

Z.  want    of    accurate    definition,    due    to 

f  ... 

ambiguity  in  the  use  of  words,  and  to 

^^  attempts  to  reconcile  existing  condi- 
v^  tions  with  certain  preconceived  theories. 
Common  observation  shows  that  in- 
crease in  the  number  of  laborers 
tends  to  lower  wages,  hence  there 
springs  up  the  theory  that  wages 
depend  upon  the  relation  between  the 
number  of  laborers  and  the  amount 
of  capital  devoted  to  their  employ- 
ment. Certain  writers,  in  reflecting 
on    this    theory,    saw    that    this    ought 


«^«bv24V' 


4  PREFACE. 

not  to  be  ;  that  wages  should  depend 
upon  the  abiHty  to  produce  wealth. 

Likewise  in  considering  the  ques- 
tion of  what  is  the  cause  of  value, 
one  class  of  writers  insist  that  sup- 
ply and  demand  alone  is  the  deter- 
mining cause  of  value,  others  say 
that  human  effort  should  be  the  basis 
of  value.  If,  under  a  competitive  sys- 
tem, prices  conform  to  supply  and 
demand,  it  does  not  thereby  prove 
that,  under  another  system,  values 
could  not  be  based  upon  human  effort. 

So  with  the  question  as  to  the 
origin  and  justification  of  interest. 
It  is  easy  to  show  that  interest  is 
natural  under  the  competitive  system, 
as  it  is  clear  that  the  possession 
of  capital  gives  a  power  to  accumu- 
late  wealth    to    the   owner.     It    seems. 


PREFACE.  5 

therefore,  perfectly  just  and  proper 
that  money  should  bear  interest,  and 
it  is  not  generally  questioned  until 
one  examines  into  its  origin  and 
calls  into  question  the  competitive 
system    itself. 


WAGES. 

The  current  theory  of  wages  starts 
with  the  proposition  that  wages,  in 
the  aggregate,  depend  upon  the  ratio 
between  capital  and  population  ;  hence 
the  idea  of  a  Wages  Fund  out  of 
which  the  laborers  are  remunerated. 
It  therefore  becomes  impossible  for 
wages,  considered  in  the  aggregate,  to 
increase  without  a  corresponding  aug- 
mentation of  the  Wages  Fund,  or  a 
decrease  in  the  number  of  laborers. 

This  position,  it  is  true,  has  not 
been  without  its  opponents ;  attacks 
upon  the  doctrine  have  been  made  by 
W.    T.     ihornton,      "  On     Labor,     Its 


8  AN  EQUITABLE  EXCHANGE  SYSTEM. 

Wrongful  Claims  and  Rightful  Dues  ;  " 
Prof.  F,  A.  Walker,  "  The  Wages 
Question,"  Henry  George,  "  Progress 
and  Poverty"  and  others,  Mr.  Thorn- 
ton's reasons  were  so  potent  as  to 
cause  John  Stuart  Mill  to  abandon 
the  Wages  Pund  Theory.  Prof,  F.  A, 
Walker  and  Henry  George  have 
demonstrated  that  the  wages  of  the 
laborer  are  paid  out  of  the  product 
of  his  industry.  Notwithstanding  the 
arguments  of  these  able  writers,  the 
idea  that  wages  depend  upon  supply 
and  demand  clings  with  remarkable 
tenacity  to  the  average  newspaper 
editor  and  politician.  It  is  reflected 
in  the  laws  restricting  immigration  and 
the  prohibition  of  the  importation  of 
contract  labor,  in  the  efforts  made 
by    the    labor    unions    to    prevent    the 


WAGES. 


sale  of  prison-made  goods,  and  in  the 
selfishness  of  trades-unions  when  they 
restrict  the  number  of  apprentices  in 
certain  trades. 

The  doctrine  of  Protection  is 
grounded  upon  this  false  theory  of 
wages.  The  protectionist  asserts  that 
when  foreign-made  goods  are  per- 
mitted to  come  into  the  country  in 
competition  with  the  domestic  product, 
without  restriction,  the  sale  of  the 
domestic  product  is  interfered  with 
and  wages  must  necessarily  fall,  and, 
on  the  other  hand,  if  tariff  duties  are 
levied  sufficiently  high  to  restrict  im- 
portations, just  to  that  extent  will  the 
demand  for  domestic  goods  increase, 
and  wages  rise.  When  trade  between 
the  states  is  considered,  every  en- 
couragement is    given    to  facilitate  ex- 


lO         AN  EQUITABLE  EXCHANGE  SYSTEM. 

changes.  State  tariffs  and  discrimi- 
nation are  prohibited  by  law.  When 
the  Supreme  Court  decided  that  it 
was  unconstitutional  for  states  to  levy 
a  tax  upon  commercial  travelers  from 
other  states,  it  was  hailed  with  delight 
by  merchants  and  manufacturers  every- 
where. While  it  is  looked  upon  as 
desirable  to  encourage  free  trade  be- 
tween the  North  and  South  and  the 
East  and  West,  it  is  considered  wrong 
in  principle  to  admit  Canada  to  the 
same  privilege.  So  soon  as  the  imagi- 
nary boundary  line  is  passed,  com- 
petition is  assumed  to  be  of  a  kind 
which  will  interfere  with  American  in- 
dustry. 

The  difference  in  the  rate  of  wages 
which  exists  between  workmen  of  the 
southern      states     and     those     of     the 


WAGES.  1 1 


North  is  greater  than  the  difference 
existing  between  the  Canadian  and 
the  resident  of  Maine.  If  we  investi- 
gate the  reason  why  the  American 
Federation  of  Labor  should  petition 
Congress  to  throw  out  the  machines 
proposed  to  be  used  by  the  Bureau 
of  Eng-ravincr,  we  shall  find  the  same 
fundamental  fallacy  which  is  at  the 
root  of  the  Protection  theory,  which 
advocates  restricted  immigration,  and 
the  prevention  of  the  sale  of  con- 
vict-made products.  This  fallacy  is, 
"  That  demand  for  labor  is  a  fixed 
quantity."  I  am  willing  to  admit 
that  so  long  as  the  competitive 
system  of  exchange  continues,  the 
demand  for  laljor  will  be  interfered 
with  sufficiently  to  justify  the  i)osition 
of     the     protectionist    and      the     labor 


12         AN  EQUITABLE  EXCHANGE  SYSTEM. 

unions.  But  with  a  system  of  ex- 
change which  will  insure  to  every 
worker  the  full  value  of  his  labor, 
demand  in  the  aggregate  will  keep 
pace  with  production  in  the  aggregate. 

Let  us  consider  these  subjects  in 
detail.  A  very  little  reflection  will 
show  that,  as  our  criminals  must  be 
fed  and  clothed,  the  means  for  their 
support  must  be  supplied,  and  the 
common-sense  way  is  to  let  them 
work  and  be  self-supporting.  If 
society  is  taxed  to  support  them  in 
idleness,  the  workers  must  pay  the 
taxes.  It  is  fallacious  to  say  the  rich 
pay  the  taxes.  All  wealth  is  the  pro- 
duct of  labor,  and  the  wao-e-earner 
furnishes  the  means  with  which  the 
wealthy  pay. 

Next,    why    should    additional    num- 


WAGES.  13 

bers  lower  wages  ?  Let  us  suppose 
one  hundred  men  engaged  in  produc- 
tion. If  they  are  producing  for  them- 
selves, the  quantity  of  their  products 
will  fix  their  aggregate  wages.  Now 
suppose  the  arrival  of  one  hundred 
immigrants.  If  each  man  is  able  to 
produce  as  much  wealth  as  each  of 
the  original  one  hundred,  why  should 
wag-es  decline  ?  If  the  new  arrivals 
happen  to  be  more  inventive  or  more 
industrious  than  the  natives  and  turn 
out  7}i07'e  zvealtJi,  why  should  not 
wages  advance  ? 

Next  is  the  question  of  machinery. 
The  opposition  to  the  use  of  machin- 
ery has  always  been  based  u[)on  the 
ground  that  the  machine  displaced  the 
laborer.  If  it  does  so,  remember  it  is 
the  fault  of  our  system  of  exchange, 
and  not  of  the  machine. 


14         AN  EQUITABLE  EXCHANGE  SYSTEM. 

To  return  to  our  one  hundred  men 
engaged  in  production.  I  have  stated 
that  their  wages  are  determined  by 
the  amount  of  wealth  they  produce. 
Now  if  one  of  their  number  invents 
a  machine  which  enables  him  to  pro- 
duce ten  times  as  much  wealth  as  be- 
fore, is  not  the  aggregate  wealth 
thereby  increased  ?  and  should  not 
wages  advance  ? 

The  reasons  why  machinery  and  im- 
provement in  methods  of  production 
fail  to  produce  the  improvement  in 
the  condition  of  the  workers  which 
we  would  naturally  expect,  and  that 
the  facts  seem  to  harmonize  v^ith  the 
wage  fund  theory,  are  : 

First,  That  land  is  monopolized. 

Second,  The  wage-earner  only  re- 
ceives  what    is  left    after    the    landlord 


WAGES.  15 

gets  his  rent,  the  capitalist  his  inter- 
est, and  the  merchant  his  profits,  con- 
sequently he  is  enabled  to  purchase 
but  a  fraction  of  the  wealth  he  him- 
self produces.  Given  a  system  under 
which  the  wage-earner  will  secure  all 
that  he  is  entided  to,  the  full  value 
of  his  own  labor,  and  the  anomaly  of 
an  apparent  overproduction  of  wealth, 
accompanied  by  inability  on  the  part 
of  the  producers  to  create  demand, 
will  be  a  thing  of  the  past.  Produc- 
tion will  never  be  so  great  in  the 
^gg^^gate  that  demand  will  not  keep 
pace  with  it.  .Supply  and  demand 
will  then  be  ecpiivalent  terms. 


l6         AN  EQUITABLE  EXCHANGE  SYSTEM. 


PROFIT. 

Profit  is  the  term  used  in  trade  to 
express  the  sum  received  for  a  com- 
modity in  excess  of  its  cost.  Strictly 
speaking,  there  is  no  profit  until 
wages,  rent,  and  interest  on  capital 
invested,  are  paid.  I  take  the  ground 
that  profit  is  inconsistent  with  an 
equitable  distribution  of  wealth.  All 
profit  is  a  deduction  from  what  would 
otherwise  go  to   the  producer. 

If  we  suppose  a  community  en- 
gaged in  production,  the  first  essen- 
tial to  an  equitable  exchange  would 
be  to  determine  the  values  of  the 
various    commodities.     To   get   at   the 


PROFIT.  17 

values,  the  cost  of  production  must 
be  ascertained.  Now,  if  each  indi- 
vidual exchanored  his  jjoods  at  the 
cost  of  production,  it  is  clear  that  no 
one  would  derive  a  profit  by  ex- 
change. Each  would  be  benefited, 
however,  by  exchanging  a  commodity 
for  something  more  useful  to  himself, 
but  the  values  of  the  commodities 
would  be  the  same.  Now,  suppose 
some  of  the  producers,  in  some  way, 
manage  to  exchange  their  goods  at 
double  their  cost.  Is  it  not  clear  that 
their  profit  would  be  at  the  expense 
of  the  rest  of  the  community  ?  If  all 
the  producers  doubled  the  price  of 
their  goods,  no  one  would  derive  any 
profit  therefrom  ;  it  would  be  simply 
figuring  values  in  a  different  ratio. 
The  essential  idea  of  profit  is  that  an 


l8         AN  EQUITABLE  EXCHANGE  SYSTEM. 

owner  secures  more  wealth  for  his 
goods  than  he  gives.  Now,  it  is  per- 
fectly manifest  that  two  parties  to  an 
exchange  cannot  both  get  more  wealth. 
One  man's  grain  is  the  other's  loss. 

Our  present  mercantile  system  was 
probably  the  outgrowth  of  the  incon- 
venience each  producer  would  expe- 
rience in  hunting  up  a  man  who 
wanted  his  wares.  This  difficulty 
would  at  once  suggest  the  plan  of 
each  man  depositing  his  wares  at 
some  common  center,  where  each 
could  find  what  he  wanted.  Some 
one  must  be  employed  to  attend  to 
the  distribution,  and  his  pay  must 
come  out  of  the  common  stock.  In- 
stead of  this  method,  which  seems  the 
natural  one,  the  distributors  or  mer- 
chants found  they  could  fix  their  own 


PROFIT.  19 

compensation  by  buying  the  goods 
from  the  producers,  and  adding  a 
profit  to  suit  themselves.  Those  mer- 
chants who  could  control  the  most 
money,  and  who  were  the  sharpest 
in  making  bargains,  became  the  most 
successful.  As  the  profit  system  ex- 
tended, individuals  combined  in  order 
to  monopolize  the  natural  sources  of 
wealth  and  to  obtain  control  of  fran- 
chises, and  finally,  as  a  natural  evo- 
lution from  such  a  becrinninof,  we 
have  the  present  competitive  system. 
We  are  so  accustomed  to  look  upon 
this  system  as  equitable  and  just, 
that  the  average  man  is  somewhat 
shocked  if  you  even  suggest  a  pos- 
sible change  for  the  better.  The 
prolit  system  is  everywhere  accepted 
as    a    natural    law. 


20         AN  EQUITABLE  EXCHANGE  SYSTEM. 

Prof.  Walker  says  :  "Men  pro- 
duce wealth  not  for  the  sake  of  pro- 
ducing it,  but  with  a  view  to  a  profit. 
There  is,"  he  says,  "doubtless  a  sat-, 
isfaction  in  conferring  benefits  on  the 
dependent,  a  pride  in  directing  great 
operations,  an  enthusiasm  of  work, 
which  make  up  a  part  of  the  com- 
pensation of  many  employers  ;  but  it 
is  evident  that  these  cannot  be  relied 
upon  to  any  great  extent  as  motives 
to  the  systematic  and  sustained  pro- 
duction of  wealth  through  wage-labor. 
Individual  profit  is  and  must  remain 
the  great  reason  for  production.  If  a 
person  have  wealth,  that  of  itself  con- 
stitutes no  reason  at  all  to  him  why 
he  should  expend  any  portion  of  it 
on  labor,  on  machinery,  or  on  ma- 
terials." 


PROFIT.  21 


On  the  contrary,  I  assert  that  profit 
is  in  no  way  essential  to  the  pro- 
duction of  wealth.  If  all  goods  were 
exchanged  at  the  cost  of  production, 
without  one  iota  of  profit  in  the  eco- 
nomic sense,  there  would  be  every 
incentive  to  create  wealth.  Men  will 
produce  to  procure  wealth  for  use 
and  enjoyment.  It  is  because  men 
have  wants  that  wealth  is  produced. 
Necessity  is  the  primary  cause  of 
production,  not  profit.  Under  our 
competitive  system  profit  is  doubtless 
a  cause  of  production,  ])ut  I  hope  to 
show  that  an  equitable  exchange  sys- 
tem is  within  our  reach,  one  which, 
with  profit  abolished,  will  yet  bring 
about  the  greatest  possible  produc- 
tion   of   wealth. 

The    late    Henry    George,    following 


2.2         AN  EQUITABLE  EXCHANGE  SYSTEM. 

in  the  footsteps  of  earlier  economic 
writers,  states :  "  It  seems  to  me 
that  in  itself  exchange  brings  about 
a  perceptible  increase  in  the  sum  of 
wealth."  In  the  Yankee  story  of  the 
two  schoolboys,  so  'cute  at  a  trade 
that,  when  locked  in  a  room,  they 
made  money  by  swapping  jack-knives, 
there  is  the  exaggeration  of  a  truth. 
Each  of  the  two  parties  to  an  ex- 
change aims  to  get,  and  as  a  rule 
does  get,  something  that  is  more 
valuable  to  him  : — a  greater  power  of 
labor  to  satisfy  desire.  Thus  there  is 
in  the  transaction  an  actual  produc 
tion  of  wealth. 

A  trading  vessel,  for  instance, 
penetrating  to  the  Arctic  regions,  ex 
changes  fish-hooks,  harpoons,  powder 
and    i-'uns,    knives   and    mirrors,    orreen 


PROFIT.  23 

spectacles  and  mosquito  nets,  for  pel- 
tries. Each  party  to  the  exchange 
gets,  in  return  for  what  costs  com- 
paratively little  labor,  what  would  cost 
it  a  great  deal  of  labor  to  get  by 
either  of  the  other  modes  of  produc- 
tion. Each  gains  by  the  act.  The 
sum  total  of  the  wealth  of  the  world 
is  increased  by  the  exchange  itself." 

Mr.  Georore  first  defines  wealth 
as  "  the  concrete  result,  the  tangible 
embodiment  by  change  wrought  in 
material  thing?,  of  labor  exerted 
towards  the  satisfaction  of  desire." 
"  To  talk  of  immaterial  wealth,  as 
some  professed  economists  now  talk, 
is  as  much  a  contradiction  in  terms 
as  it  would  b(;  to  talk  of  square  cir- 
cles or  triangular  squares."  "Nothing 
can    be  wealth    that  is   not   tanidble   to 


24  AN   EQUITABLE   EXCHANGE  SYSTEM. 

the  senses.  Nor  can  wealth  include 
any  natural  substance  or  form  or 
power  unmodified  by  man's  exertion, 
nor  any  human  power  or  capacity  of 
exertion.  To  talk  of  natural  wealth, 
or  to  talk  of  human  skill,  knowledge 
or  energy,  as  included  in  wealth, 
is  also  a  contradiction  in  terms." 
"Wealth  is  the  product  of  labor 
applied  to  land  or  its  products." 
"Only  such  things  can  be  wealth,  the 
production  of  which  increases  and  the 
destruction  of  which  decreases  the 
aggregate    of   wealth." 

Accepting  this  definition  of  wealth, 
how  is  it  possible  to  admit  that 
wealth  increases  through  exchange  ? 
The  two  boys  exchanging  jack-knives 
do  not  add  to  the  sum  total  of  jack- 
knives.     Members    of    the    Stock    Ex- 


PROFIT.  25 

change  and  speculators  do  not  in- 
crease the  wealth  of  the  country  by 
buying-  and  selling  stocks.  Nor  do 
gamblers  playing  poker  add  to  the 
number  of  dollars  in  existence.  Ex- 
changes carried  on  under  the  profit 
system  differ  in  no  essential  particu- 
lar from  exclianofino^  stocks,  or  from 
exchanging  dollars  by  gambling,  in  so 
far  as  they  affect  the  sum  total  of 
wealth.  Just  as  the  stock  broker  and 
the  gambler  profit  at  the  expense  of 
others,  so  do  merchants  profit  at  the 
expense  of  the  producers.  Men  can 
exchange  until  doomsday  without  the 
sum  total  of  the  wealth  increasing  a 
jot. 

All  products  of  labor  which  are  in 
demand  have  a  normal  value.  Prices 
may    oscillate    on    eltlK^r    side    of    this 


26         AN  EQUITABLE  EXCHANGE  SYSTEM. 

line  of  normal  value  by  reason  of 
variations  in  supply  and  demand. 
This  Mr.  Georo^e  admits.  Then  it  fol- 
lows,  all  the  vv^ealth  of  the  country  has 
a  certain  value,  and  such  wealth  in 
the  aggregate  can  only  increase  by 
an  actual  addition  to  the  valuable 
things.  Exchange  adds  nothing  what- 
ever. The  addition  which  Mr.  George 
claims  is  immaterial  and  imaginary.* 
A  similar  fallacy  shows  itself  in  the 
contention  that  wealth  increases  or 
diminishes  when  general  prices  rise 
or  fall.  If  the  nominal  prices  of 
all  commodities  were  to  be  doubled, 
say  by  an  increase  in  the  volume  of 
money,  the  real  wealth  of  the  country 
would  not  be  altered  thereby ;  and 
when     stocks     tumble     one     thousand 


*This  does   not   deny   that   the   labor  of   transportation 
adds  to   value. 


PROFIT.  27 

millions,  owinor  to  a  war  scare,  wealth 
in  the  aggregate  has  not  changed. 

I  have  seen  it  stated  that  the 
losses  this  country  sustained  by  the 
depreciation  following  the  demonetiza- 
tion of  silver  have  amounted  to  billions 
of  dollars.  The  real  loss  here  is  not 
the  general  fall  in  prices,  which  sim- 
ply transfers  wealth  from  the  debtor 
to  the  creditor  classes,  but  the  loss 
in  production  due  to  the  enforced 
idleness   of  the    workers. 

If  profit  is  a  deduction  from 
the  wealth-producers'  earnings,  it  will 
seem  strange  if  such  a  system  can 
endure ;  nor  will  it  if  the  wage-earn- 
ers become  intelligent  enough  to  com- 
prehend it. 

Adam  Smith's  saying  that  "  The 
produce   of  labor  constitutes   the   natu- 


28  AN   EQUITABLE  EXCHANGE  SYSTEM. 

ral  recompense  or  wages  of  labor,"  is 
as  true  to-day  as  when  he  wrote  it. 
It  may  be  claimed  that  profits  under 
competition  tend  to  a  minimum, — that 
the  majority  of  merchants  fail  to 
receive  any  profit  over  and  above  what 
might  be  considered  a  fair  compensa- 
tion for  their  services.  This  is  true, 
and  it  is  the  result  of  too  many  being 
engaged  in  distribution.  When  we 
consider  the  enforced  idleness  of  the 
employees  of  our  mercantile  establish- 
ments during  a  considerable  portion 
of  the  day,  it  will  be  seen  that  much 
more  business  could  be  transacted 
with  half  the  number  of  employees,  if 
the  work  could  be  distributed  throuofh 
the  day,  instead  of  being  crowded 
into  a  few  hours.  A  more  costly 
method    of    distribution    it    would    be 


PROFIT.  29 

difficult  to  imagine  than  the  competi- 
tive system.  Needless  expenses  are 
multiplied  in  every  direction.  Un- 
necessary, costly  display,  useless  ad- 
vertising, expensive  book-keeping,  due 
to  the  credit  system,  and  waste  effort 
In  order  to  get  trade  away  from  com- 
petitors, are  but  suggestions  of  the 
immense  savings  which  would  accrue 
to  society  by  the  adoption  of  a 
proper  method  of  distribution. 


30         AN  EQUITABLE  EXCHANGE  SYSTEM. 


INTEREST. 

Probably  no  subject  of  economic 
discussion  has  occasioned  greater  di- 
versity of  opinion,  as  to  its  origin, 
than  interest. 

The  feeUng  that  interest  is  a  de- 
duction from  what  would  otherwise 
go  to  the  wage-earner,  is  widespread 
at  the  present  time  ;  nor  is  it  of 
recent  origin.  The  Mosaic  Code  for- 
bade the  lending,  at  interest,  between 
Jews,  although  it  permitted  its  accept- 
ance by  Jews  from  strangers.  In 
Rome,  interest  between  Roman  citi- 
zens was  forbidden  by  the  Lex 
Genucia,   B.   C.  322. 


INTEREST.  31 

The  early  Christian  Church  also 
opposed  interest.  In  the  writings  of 
the  Scriptures  were  to  be  found  pas- 
sages which  lent  powerful  support  to 
the  feelingf  ag^ainst  it.  From  Luke  6  : 
35  :  "  Lend,  hoping  for  nothing 
again,"  From  Deuteronomy  23  :  19  : 
"Thou  shalt  not  lend  upon  usury  to 
thy  brother,  usury  of  money,  usury  of 
victuals,  usury  of  anything  that  is  lent 
upon  usury." 

The  taking  of  interest  was  for- 
bidden to  the  clergy.  This  was  after- 
wards extended  so  as  to  include  the 
laity  as  wtrll.  For  1500  years  the 
hostility  to  interest  is  manifest  in  the 
theological  and  legal  literature  of  the 
Church.  Pope  Clement  \'.,  at  the 
Council  of  X'ienna,  in  1311,  \v(;nt  so 
far    as    to     threaten     excommunication 


32         AN  EQUITABLE  EXCHANGE  SYSTEM. 

to  those  magistrates  who  passed  laws 
favorable  to  interest.  Gradually  the 
Church  consented  to  a  practical  com- 
promise, as  it  could  not  be  entirely 
eradicated,  and  so  it  was  thought  bet- 
ter to  allow  it  within  certain  limits. 
This  view  was  taken  by  Zwingli,  Me- 
lancthon,  and  by  Luther  in  his  later 
days.  In  the  reign  of  Henry  VII., 
Parliament,  in  making  laws  legalizing 
interest,  still  thought  it  necessary  to 
comment  thus  :  "  That  all  usury  was 
damnable,  contrary  to  the  law  of  God, 
and  detestable." 

About  the  middle  of  the  sixteenth 
century  numerous  writers,  in  oppo- 
sition to  the  prohibition  of  interest, 
found  the  mercantile  community  very 
willing  to  listen  to  their  arguments, 
and   a    chanoe    in    sentiment    soon    be- 


INTEREST.  33 

came  manifest.  By  the  end  of  the 
eighteenth  century  interest  had  be- 
come so  firmly  established  as  to  have 
but  few  opponents. 

Calvin  is  said  to  have  been  the 
first  theologian  to  dissent  from  the 
views  of  the  canonists  respecting  in- 
terest. In  a  letter  to  his  friend 
CEkolampadius,   he    says  : 

"It  is  with  money  as  it  is  with  a 
house  or  field  ;  the  roof  and  walls  of 
a  house  cannot,  properly  speaking, 
beget  money,  but  where  the  use  of 
the  house  is  exchanged  for  money  a 
legitimate  money  gain  may  be  drawn 
from  the  house.  In  the  same  way 
money  can  be  made  fruitful.  When 
land  is  purchased  for  money,  it  is 
fpiite  corr('ct  to  think  of  the  money 
as  producing  other  sums  of  money  in 


34         AN  EQUITABLE  EXCHANGE  SYSTEM. 

the  shape  of  the  yearly  revenue  from 
the  land. 

"  Unemployed  money  is  certainly 
barren,  but  the  borrower  does  not  let 
it  lie  unemployed.  The  borrower, 
therefore,  is  not  defrauded  in  having 
to  pay  interest ;  he  pays  it,  ex  pro- 
venht,  out  of  the  grain  that  he  makes 
with  the  money.  A  rich  man,  who 
has  plenty  of  landed  property  and 
general  income,  but  little  ready 
money,  applies  for  a  loan  to  one 
who  is  not  so  wealthy,  but  happens 
to  have  a  great  command  over  ready 
money.  The  lender  could,  with  the 
money,  purchase  land  for  himself.  If, 
instead  of  doing  so,  he  contents  him- 
self with  the  interest,  the  fruit  of  the 
money,  how  could  this  be  blame- 
worthy ?     He   concludes   that   the  tak- 


INTEREST.  35 

ing  of  interest  cannot  be  universally 
condemned ;  but  neither  is  it  to  be 
universally  permitted,  but  only  so  far 
as  it  does  not  run  counter  to  fairness 
and  charity.  Thus  no  interest  is  to 
be  asked  from  men  who  are  in 
urgent  need  ;  that  due  consideration 
should  be  paid  to  the  '  poor  breth- 
ren '  ;  that  the  welfare  of  the  State 
should  be  considered,  and  that  the 
maximum  rate  of  interest,  established 
by  the  laws,  should  in  no  case  be 
exceeded." 

Lord  Bacon  would  permit  interest 
on  the  (ground  of  expediency.  "  Since, 
of  necessity,  men  must  give  and  take 
money  in  loan,  and  since  they  are  so 
hard  of  heart  that  they  will  not  lend  it 
otherwise,  there  is  nothing  for  it  but 
that  interest  should   be  permitted," 


36         AN  EQUITABLE  EXCHANGE  SYSTEM. 

John  Locke,  the  eminent  philoso- 
pher, in  "Some  consideration  of  the 
consequences  of  lowering  the  interest 
and  raising  the  value  of  money,"  says: 
"Money  is  a  barren  thing  and  produces 
nothing,  but  by  compact  transfers  that 
profit,  that  was  the  reward  of  one  man's 
labor,  into  an  other  man's  pocket." 
Later  he  justifies  interest  as  a  neces- 
sity, owing  to  the  constitution  of  human 
society,  and  "it  is  as  equitable  to  re- 
ceive interest  for  a  loan,  as  to  receive 
rent  from  land." 

To  Turgot  we  are  indebted  for  the 
first  attempt  at  a  scientific  solution  of 
the  problem,  known  as  the  "  Fructi- 
fication Theory."  As  capital  may  be 
invested  in  land,  and  the  possession 
of  land  guarantees  the  obtaining  of  a 
permanent     income     or     rent    without 


INTEREST.  37 

labor,  this  gives  to  capital  a  power 
of  increase  which  is  interest  proper. 
In  other  words,  "A  definite  capital 
must  yield  a  definite  interest,  because 
it  may  buy  a  piece  of  land  bearing  a 
definite  rent." 

But,  as  Dr.  Bohm-Bawerk  very 
justly  remarks  :  "  Why  can  a  person 
with  capital  buy  a  rent-bearing  piece 
of  land  ?  Turgot,  in  anticipation  of 
this  natural  (question,  appeals  to  the 
relation  of  demand  and  supply  as  at 
any  moment  furnishing  the  ground 
for  a  definite  relation  of  price  be- 
tween capital  and  labor.  But  is  this 
a  full  and  satisfactory  answer  to  the 
question  ?  Certainly  not.  The  man 
who,  when  asked  what  determines  a 
certain  j^rice,  answers,  '  Demand  and 
supply,'  offers  a  husk  for  a  kernel." 

389247 


38         AN  EQUITABLE  EXCHANGE  SYSTEM. 

Henry  George's  explanation  of  in- 
terest is  similar  to  Turgot's.  He 
states  that  ''  interest  springs  from 
the  reproductive  powers  of  nature." 
Thus,  "If  I  put  away  money,  it  will 
not  increase  ;  but  suppose  I  put  away 
wine  ;  at  the  end  of  a  year  I  will 
have  an  increased  value,  for  the  wine 
will  have  improved  in  quality.  Or, 
suppose  I  set  out  bees.  At  the  end 
of  the  year  I  will  have  more  swarms 
of  bees,  and  the  honey  which  they 
have  made.  Or,  supposing  I  turn 
out  sheep,  or  hogs,  or  cattle  ;  at  the 
end  of  the  year  I  will,  upon  the 
average,    have  an   increase," 

"Now,"  says  George,  "What  gives 
the  increase  in  these  cases  is  some- 
thing which,  though  it  generally  re- 
quires   labor    to    utilize    it,    is    yet    dis- 


INTEREST.  39 

tinct  and  separable  from  labor :  the 
active  power  of  nature,  the  principle 
of  growth,  of  reproduction,  which 
everywhere  characterizes  all  the  forms 
of  that  thing  or  condition  we  call  life, 
and  it  seems  to  me  this  is  the  cause 
of  interest." 

"  This  attempt  to  separate  produc- 
tion into  two  classes,  in  one  of  which 
the  natural  elements  assist  in  produc- 
tion while  in  the  other  they  do  not, 
is  untenable.  The  co-operation  of 
nature  is  universal  ;  all  production 
rests  on  the  fact  that  by  the  appli- 
cation of  natural  forces  we  put  im- 
perishable matter  into  useful  forms. 
Whether  the  natural  power  of  which 
we  avail  ourselves  in  this  be  vege- 
tative or  inorganic,  mechanical  or 
chemical,    makes    no    difference    what- 


40         AN  EQUITABLE  EXCHANGE  SYSTEM. 

ever  in  the  relation  in  which  natural 
power  stands  to  our  labor."  (Dr. 
Bohm-Bawerk.) 

George  insists  that  all  capital  must 
bear  interest,  because  it  may  be  ex- 
changed for  corn,  cattle,  bees  or 
wine  ;  but  is  the  increase  in  the  value 
of  a  quantity  of  corn  or  cattle  or 
bees,  which  time  brings  about,  with 
the  help  of  nature,  worth  more  than 
the  original  quantity  of  such  corn, 
cattle  or  bees,  plus  the  labor  ex- 
pended in  attending  to  the  increase  ? 
There  is  nothing  in  George's  explana- 
tion to  prove  it.  Unless  the  repro- 
ductive powers  of  nature  be  monopo- 
lized, it  is  difficult  to  see  how  any 
gain  can  accrue  to  the  user  thereby. 
If  the  soil  is  accessible  to  everyone, 
no     one     will     obtain     any    advantage 


INTEREST.  41 

over  his  neighbor.  The  laborer  is 
entitled  to  the  full  value  which  his 
work,  plus  the  reproductive  power  of 
nature,   creates. 

Senior  justifies  interest  by  claiming 
it  as  the  reward  of  abstinence.  But 
abstinence  is  not  productive.  If  the 
whole  world  refrained  from  usine 
wealth,  capital  would  not,  by  virtue 
of  such  abstinence,  increase.  In  loan- 
ing capital,  you  are  doing  the  recipi- 
ent a  service,  but  it  may  also  be  true 
that  the  borrower  is  doing  you  a  ser- 
vice in  taking  care  of  it.  Capital,  in 
most  of  its  forms,  is  more  or  less 
perishable,  and  use  may  tend  to 
preserve  it.  A  \acant  house  soon 
deteriorates,  as  many  owners  well  know. 

Bastiat  thinks  it  only  necessary  to 
point    to     the    increased     efficiency    of 


42  AN   EQUITABLE  EXCHANGE  SYSTEM. 

labor,  due  to  the  possession  of  tools, 
to  show  the  justice  of  interest.  That 
the  possession  of  tools  increases  the 
productive  power  of  labor,  and  raises 
general  wages,  is  evident.  But  the 
question  is.  Where  tools  are  in  uni- 
versal use,  and  there  is  no  monopoly, 
do  the  users  of  tools  secure  increased 
prices  for  their  products  which  enable 
them  to  pay  interest  ?  Does  not  the 
competition  of  sellers  compel  a  man 
who  pays  interest  to  sell  his  goods 
as  low  as  a  man  who  owns  his 
tools,  and  has  no  interest  to  pay  ? 
If  the  opportunity  to  create  their  own 
capital  is  offered  to  everyone,  very 
few  men  will  pay  interest  for  the  use 
of  what  their  own  labor  will  create 
for   them. 

That     the     power     that     exists     in 


INTEREST.  43 

machinery  and  tools  to  increase  the 
productive  power  of  labor  is  not 
the  cause  of  interest,  is  conclusively 
proven  by  the  fact  that  during  the 
past  fifty  years,  which  marks  the  most 
important  era  in  the  age  of  invention, 
interest  has  declined. 

Dr.  Bohm-Bawerk,  whose  criticism 
of  the  various  interest  theories  has 
earned  for  him  a  world-wide  reputa- 
tion, takes  the  ground  that  interest 
has  its  origin  in  the  fact  that  present 
goods  have  a  different  value  from 
future  goods.  "  If  one  were  to 
give  a  thousand  persons  the  choice 
whether  they  would  rather  take  a  gift 
of  ^'jsioo.oo  to-day,  or  take  it  fifty 
years  hence,  surely  all  the  thousand 
persons  would  prefer  to  take  the 
$100.00    now.      Or,     if    one    were    to 


44         AN  EQUITABLE  EXCHANGE  SYSTEM. 

ask  a  thousand  persons,  who  wished 
a  horse,  and  were  disposed  to  give 
$100.00  for  a  good  one,  how  much 
they  would  give  now  for  a  horse  that 
they  would  only  get  possession  of  in 
ten  or  in  fifty  years,  although  as 
good  an  animal  were  guaranteed  at 
that  time,  surely  they  would  all  name 
an  infinitely  smaller  sum,  if  they 
named  one  at  all,  and  thereby  they 
would  surely  prove  that  everybody 
considers  present  goods  to  be  more 
valuable  than  future  o-oods  of  the 
same    kind." 

But  is  this  true  of  all  capital  ?  Let  " 
us  see.  Here  is  a  business  property 
centrally  located.  If  one  thousand 
persons  were  asked  if  they  would 
take  its  value  now  or  ten  years 
hence,    would   they  all    prefer   it   now  ? 


INTEREST.  45 

Here  is  a  quantity  of  whiskey  and 
wine.  Is  it  manifest  that  everyone 
would  prefer  the  value  of  the  present 
goods  to  that  of  the  future  goods  ? 
It  is  true  of  most  capital  that  its 
present  value  is  greater  than  future 
value,  but  it  is  not  true  of  all  capital. 
It  is  no  unusual  matter  for  the 
owners  of  present  wealth  to  prefer 
its  future  use,  and  to  pay  storage 
and  safe-deposit  companies  to  deliver 
it  to   them  at  a  future  date. 

To  me  it  seems  clear  that  interest 
can  be  accounted  for,  first,  by  our 
laws,  whicli  permit  men  to  buy  land 
and  thus  control  the  natural  sources 
of  wealth  ;  second,  by  our  exchange 
system,  which  enables  men  to  invest 
capital  in  a  profit-making  busin<;ss  ; 
third,    by    the    unecpiai    distribution    of 


46         AN  EQUITABLE  EXCHANGE  SYSTEM. 

capital,     due     to     the     monopoly     of 
natural    opportunities. 

If  the  land  were  owned  by  the 
State,  as  it  should  be,  and  the  profit 
system  abolished,  capital  could  no 
longer  be  invested  so  as  to  bring  in 
a  return  in  interest.  The  only  source 
left  for  the  capitalist  to  derive  an  in- 
come from  would  be  production,  and  so 
long  as  capital  is  in  the  hands  of  the 
few  interest  will  obtain  ;  but  even  this 
source  will  gradually  disappear  as  cap- 
ital becomes  more  uniformly  diffused. 
If  it  be  asked  what  inducement  is  left 
to  the  capitalist  to  engage  in  produc- 
tion, I  reply,  profit  is  not  the  cause  of 
production.  Men  will  produce  because 
they  are  in  want  of  something,  and  in 
order  to  produce  they  will  accumulate 
capital. 


INTEREST.  47 

If  there  be  a  normal  or  natural 
interest  rate,  why  should  the  laws  of 
nations  prohibit  usurious  rates  ?  It  is 
looked  upon  as  perfectly  right  and 
proper  to  take  six  per  cent,  interest, 
and  yet  it  is  made  a  criminal  act  to 
take  seven  per  cent. 

That  interest  is  not  a  natural  thing 
is  proven  by  the  fact  that  it  never 
has,  nor  ever  can,  continue  uninter- 
ruptedly for  a  long  period.  Edward 
Kellogg  says  :  "  Suppose,  when  Vir- 
ginia was  settled  in  1607,  Kngland 
had  sold  to  the  first  settlers  the 
whole  of  the  United  States  for  $1000, 
and  had  taken  a  mortfjaoe  for  this 
sum,  with  the  understanding  that  the 
interest  was  not  to  be  paid  off,  but 
to  be  added  annually  to  the  principal; 
in    two    hundred    and    fifty    years    the 


48         AN  EQUITABLE  EXCHANGE  SYSTEM. 

debt  would  have  reached  the  enor- 
mous sum  of  $33,554,432,000.  All 
the  increase  in  the  wealth  of  the 
nation,  due  to  labor,  would  not 
equal  this  sum." 

Says  Arthur  Kitson  :  "  It  is  not 
necessary  to  go  back  so  many  years 
to  show  the  impossibility  of  usury  as  a 
scientific  principle.  Usury  is  always  in- 
creasing more  rapidly  than  v/ealth.  It 
knows  no  period  of  depression,  no  time 
of  stagnation,  no  failure  of  crops,  no 
unfortunate  speculation,  no  condition  of 
ill-health  and  inability  to  produce.  It 
forever  goes  on  as  regular  as  time, 
and  as  relentlessly  as  gravitation,  count- 
ing and  adding  to  men's  burdens,  pil- 
ing them  higher  and  higher,  until  the 
load  becomes  too  great  and  they  fall, 
crushed   by  the  weight  of  oppression." 


INTEREST.  49 

Says  Mr,  I.  W.  Bennett,  in  The 
Arena,  March,  1894:  "The  borrowed 
capital  of  this  country  claims  more  in 
remuneration  than  the  country  can 
produce.  Every  dollar  invested  in 
business  claims  a  return  called  inter- 
est ;  every  dollar  representing  debts 
unpaid  claims  a  like  remuneration. 
This  must  all  be  paid  out  of  the 
production  of  each  year,  and  from 
each  year's  product  men  must  be  fed 
and  clothed  and  sheltered.  The 
wealth  of  the  world  must  be  kept 
up  ;  buildings,  machinery,  everything, 
must  be  kept  in  repair  ;  and  improve- 
ments for  use  in  the  future  must  be 
taken  from  the  stock  of  the   present. 

"  There  is  not  wealth  enough  to 
meet  all  these  obligations,  and  the 
business    of   th(;    world    must    go    into 


50         AN  EQUITABLE  EXCHANGE  SYSTEM. 

the  hands  of  a  receiver  every  now 
and  then,  so  that  a  new  start  in 
business  may  be  made.  The  coun- 
try, with  its  alHed  industries,  is  analo- 
gous to  a  mammoth  business  con- 
cern. When  it  contracts  greater 
HabiHties  than  it  can  meet  it  fails, 
and  we  have  a  financial  panic.  This 
state  of  bankruptcy  is  chronic. 
Counting  everything,  the  liabilities  of 
the  country  are  always  greater  than 
its  assets.  The  industrial  world  is 
always  in  a  state  of  potential  bank- 
ruptcy, but  credit  tends  to  keep  it 
out  of  the  hands  of  a  receiver." 

Interest  is  unquestionably  the  chief 
cause  of  the  inequality  in  the  distri- 
tribution  of  wealth.  The  possession 
of  money  enables  men  to  live  in  idle- 
ness  from    the   labor   of  others.     Pro- 


INTEREST.  51 

hibit  the  monopoly  of  land,  the 
natural  source  of  all  wealth,  and 
do  not  permit  men  to  secure  by 
exchange  a  portion  of  the  value 
created  by  others,  and  the  interest 
problem    will    settle    itself 


52         AN  EQUITABLE  EXCHANGE  SYSTEM. 


RENT. 

Rent  springs  from  what  Ricardo 
calls  the  "  original  and  indestructible 
properties  of  the  soil."  It  is  deter- 
mined "by  the  excess  of  the  produce 
of  land,  over  that  which  the  same 
application  can  secure  from  the  least 
productive  land  in  use."  As  applied 
to  agricultural  land,  there  is  no  dis- 
puting this  definition  ;  the  mere  state- 
ment is  sufficient  to  bring-  conviction. 
But  when  we  investigate  the  cause 
of  store  rents,  we  find  they  are  due 
to  competition  amongst  merchants  for 
an  opportunity  to  make  profit. 

It    is    clear    that    economic    rent    is 


RENT.  53 

the    result   of  land   monopoly,    and   in 
justification  we  must  assume  that  men 
have    the    right    to     take     possession, 
and  demand  rental  for  the  use  of  the 
land.      The    question    of    the    private 
ownership  of  land  must  be  considered 
in  relation  to  the  best  interest  of  the 
entire    community.     No    one    can    dis- 
pute   the    right    of    a    community,    or 
an    individual,    to    take    possession    of 
a    tract    of   land    not    previously  occu- 
pied,   and    make    use    of    it  ;    but   this 
right     must    always     take     into     con- 
sideration the  rights  of  future  genera- 
tions.     Says      Henry     George :     "  As 
for   the    deduction   of  a  complete  and 
exclusive  individual  right  to  land  from 
priority     of     occupation,     that     is,     if 
possible,     the     most     absurd     ground 
on     which     land     ownership     can     be 


54         AN  EQUITABLE  EXCHANGE  SYSTEM. 

defended.  Priority  of  occupation  give 
exclusive  and  perpetual  title  to  the 
surface  of  the  globe  on  which,  in  the 
order  of  nature,  countless  generations 
succeed  each  other !  Had  the  men 
of  the  last  generation  any  better  right 
to  the  use  of  this  world  than  we  of 
this  ?  Or  the  men  of  a  hundred 
years  ago,  or  of  a  thousand  years 
ago  ?  Had  the  mound-builders,  or 
the  cave-dwellers,  the  contemporaries 
of  the  mastodon  and  the  three-toed 
horse ;  or  the  generations  still  further 
back,  who,  in  the  dim  seons  that  we 
can  only  think  of  as  geologic  periods, 
followed  each  other  on  the  earth  we 
now  tenant  for  our  little  day? 

"  Has  the  first-comer  at  a  banquet 
the  right  to  turn  back  all  the  chairs, 
and    claim     that    none    of    the    other 


RENT.  55 

guests  shall  partake  of  the  food  pro- 
vided, except  as  they  may  make 
terms  with  him  ?  Does  the  first  man 
who  presents  a  ticket  at  the  door  of 
a  theatre,  and  passes  in,  acquire  by 
his  priority  the  right  to  shut  the 
doors  and  have  the  performance  go 
on  for  him  alone  ?  Does  the  first 
passenger  who  enters  a  railroad  car 
obtain  the  right  to  scatter  his  bag- 
gage over  all  the  seats,  and  compel 
the  passengers  who  come  in  after 
him  to  stand  up  ?  The  cases  are 
perfectly  analogous.  We  arrive  and 
we  depart,  guests  at  a  banquet  con- 
tinually spread ;  spectators  and  par- 
ticipants in  an  entertainment  where 
there  is  room  for  all  who  come  ;  pas- 
sengers from  station  to  station  on  a 
car    that    whirls    through    space,     our 


56         AN  EQUITABLE  EXCHANGE  SYSTEM. 

rights  to  take  and  possess  cannot  be 
exclusive ;  they  must  be  bounded 
everywhere  by  the  equal  rights  of 
others." 

Private  property  in  land  had  its 
origin  in  conquest.  In  our  own  coun- 
try it  is  easy  to  trace  titles.  The 
kings  of  England,  France  and  Spain, 
by  virtue  of  the  right  of  might,  took 
possession  of  the  land,  made  grants 
of  immense  tracts  to  certain  favorites, 
by  whom  in  turn  it  was  parceled  out 
to  various  settlers,  and  thus  we  buy 
and  sell  the  land  regardless  of  how 
the  title  was  acquired.  In  Pennsyl- 
vania we  pride  ourselves  on  the  fact 
that  William  Penn  purchased  the  land 
from  the  Indians,  and,  as  Henry 
George  remarks,  "  there  is  not  much 
doubt  they  would  have  sold   him   the 


RENT.  57 

moon  if  he  had  thrown  in  another 
barrel  of  rum."  As  we  are  not 
believers  in  the  divine  right  of  kings, 
how  can  we  admit  the  claims  of 
the  present  owners  derived  from  this 
source  ? 

The  right  of  property  in  wealth 
which  is  the  product  of  human  labor, 
is  absolute,  both  legally  and  morally, 
provided  it  has  been  honestly  ac- 
quired ;  but  the  land  is  not  of  man's 
creation.  The  rioht  to  its  use  belono-s 
to  the  living ;  our  ancestors  could 
convey  no  valid  title  to  deprive  us 
of  it.  The  fact  that  innocent  holders 
have  paid  for  their  land  in  honest 
earnings,  may  rightfully  claim  con- 
sideration when  the  people  make  up 
their  minds  to  claim  their  heritage, 
but    the    right    to     the    possession     is 


58         AN  EQUITABLE  EXCHANGE  SYSTEM. 

inalienable.     I  have  seldom  met  a  man 
but    would    acknowledge    the    rightful 
ness    of    this    position,     yet    they    are 
always   ready    to   defend   private  own- 
ership   on    the   ground  of  expediency. 

The  question  of  tenure  would  be 
just  as  important  if  the  public  owner- 
ship of  land  were  established,  and 
we  need  have  no  fears  but  that  a 
method  would  be  devised  which  would 
give  a  fair  and  equal  chance  to 
everybody. 

Henry  George's  Single  Tax  would 
solve  the  difficulty  if  the  competitive 
system  is  to  continue  ;  but  if  the 
people  can  understand  that  it  is 
possible  to  establish  a  system  which 
will  insure  an  equitable  distribution 
of  wealth,  and,  at  the  same  time, 
virtually   do    away    with    land    values. 


RENT.  59 

there  will  be  but  little  use  for  the 
Single   Tax. 

The  total  amount  paid  in  rents  is 
prodigious,  and  there  is  no  disputing 
the  fact  that,  as  a  factor  in  the  dis- 
tribution of  wealth,  it  is  second  in 
importance  only  to  interest.  The 
various  sources  which  make  up  the 
sum   total    of  rentals   are  : 

Business   properties. 

Residence    properties. 

Farm    properties. 

The  rent  of  business  properties  is 
due,  almost  entirely,  to  competition 
amongst  merchants  for  an  oppor- 
tunity to  make  profits.  A  portion  of 
the  sum  demanded  represents  the  in- 
terest on  the  capital  invested  in  the 
house,  plus  the  sum  necessary  to  keep 
it    in   repair ;    but    by    far    the    greater 


6o         AN  EQUITABLE  EXCHANGE  SYSTEM. 

portion  is  due  to  the  profit  system. 
Abolish  the  profit  system,  and  what 
becomes    of  these   land   values  ? 

The  rent  of  the  second  class,  or 
residence  properties,  is  partially  due 
to  competition  for  desirable  sites, 
and  chiefly  due  to  their  proximity  to 
the  business  centres  and  places  of 
amusement.  Do  away  with  the  profit 
system,  and  the  speculative  value, 
due   to    location,    would   disappear. 

The  rents  of  farm  lands  owe  their 
existence  to  convenience  of  access  to 
the  best  markets,  or  to  difference  in 
fertility.  This  latter  cause,  which  Ri- 
cardo  calls  the  "original  and  inde- 
structible properties  of  the  soil,"  is 
chiefly  the  result  of  the  application 
of  labor  and  fertilizers.  While  there 
is  doubtless  considerable  difference  in 


RENT.  6l 

the  natural  productiveness  of  the 
soil,  this  difference  may  be  almost 
annulled  by  human  ingenuity  and 
natural  agents.  Even  the  desert  may 
be  made  to  blossom  by  conveying 
water  from  the  mountain,  and  the 
rocky  hillsides  used  to  great  advan- 
tage in  raising  apples,  potatoes,  or 
valuable   timber. 

The  taxing,  by  the  State,  of  the 
value  of  farm  land,  would  thus  be  a 
very  difficult  problem.  The  question 
would  constantly  arise  whether  the 
difference  in  fertility  were  due  to 
natural  causes,  or  the  expenditure  of 
capital  and  labor.  The  difference  in 
values  arising  from  location  of  farms, 
in  reference  to  markets,  is  being 
gradually  eliminated  by  improved 
transportation    facihties. 


62         AN  EQUITABLE  EXCHANGE  SYSTEM. 

The  Single  Tax  confines  its  opera- 
tions to  the  taxing  of  land  values, 
and  would  place  no  restraint  upon 
the  production  of  wealth  by  taxing 
the  products  of  labor.  The  question 
arises,  If  its  operations  are  to  be  so 
confined,  how  can  they  find  any  land 
values  to  tax  which  are  not  due  to 
the  labor  of  man  ?  All  land  in  its 
natural  state  is  the  gratuitous  offering 
of  nature  to  mankind.  The  valuable 
qualities  which  arise  through  the  ex- 
penditure of  labor, — the  draining  of 
the  swamps,  the  clearing  of  the  for- 
ests, removal  of  stones,  and  the  appli- 
cation of  fertilizers, — are  property,  and 
to  tax  these  is  essentially  the  same 
as  to  tax  the  value  of  a  house. 

Land  values,  apart  from  the  real 
values     due     to     the     expenditure     of 


RENT.  63 

labor,  are  not  wealth.  If  every  land 
value  due  to  competition  were  to  fall 
to  zero  to-morrow,  the  sum  total  of 
wealth,  according  to  Mr.  George's 
definition,  would  not  be  affected  in 
the  least.  As  all  wealth  is  the  prod- 
uct of  human  labor,  all  taxes  must 
come  from  labor.  It  is  impossible  to 
shift  it  to  any  other  source.  Tax  in- 
comes if  you  will,  but  then  inquire 
what  is  the  source  of  incomes.  You 
can  tax  wealth  where  you  find  it,  but 
wealth,  the  product  of  labor,  is  the 
only  value  which  can  be  taxed. 
Changes  in  values,  like  the  "  un- 
earned increment  "  of  land,  are  purely 
imaginary,  A  general  advance  in 
such  values  does  not  affect  wealth. 
It  appears  to  me  our  language  re- 
quires some  other  word  than  value  to 


64         AN  EQUITABLE  EXCHANGE  SYSTEM. 

express  the  difference  between  such 
values  and  those  which  increase  the 
sum  total  of  wealth. 

The  question  of  how  the  people  are 
to  get  possession  of  their  inheritance, 
the  land,  is,  as  Herbert  Spencer  de- 
clares, one  of  the  most  intricate  prob- 
lems society  will  one  day  have  to 
solve. 

John  Stuart  Mill  advocated  the  tak- 
ing by  the  State  of  the  future  un- 
earned increment,  by  fixing  the  value 
at  the  present  time  and  appropriating 
the  future  increase.  This  is,  as 
Henry  George  states,  a  cumbersome 
method,  and  all  that  can  be  said  in 
its  favor  is,  that  it  might  be  better 
than   no  plan. 

Herbert  Spencer  says :  "  Had  we 
to  deal  with  the  parties  who  originally 


RENT. 


65 


robbed  the  human  race  of  its  heri- 
tage, we  might  make  short  work  of 
the  matter." 

A  plan  which  seems  to  me  to  be 
feasible,  is  for  the  State  to  assess  the 
value  of  the  land  and  the  improve- 
ments separately.  The  State  shall 
then  purchase  the  land  from  the  pres- 
ent owners  at  the  assessed  valuation, 
payments  to  be  made  annually.  Such 
payments  are  to  remain  as  an  incum- 
brance against  the  property.  By  this 
method  the  State  will  gradually  ac- 
quire title  without  the  shock  which 
would  follow  more  radical  measures. 
In  order  to  meet  these  annual  pay- 
ments, the  State  will  levy  a  tax  upon 
land  values  and  incomes. 

There  is  no  way  by  which  State 
ownership    can    be    accomplished,    ex- 


66         AN  EQUITABLE  EXCHANGE  SYSTEM. 

cept  by  appropriation.  Call  it  taxes, 
or  disguise  it  as  you  may,  it  is  still 
appropriation.  To  meet  the  payments 
we  must  tax  wealth  where  we  find  it. 
In  securing  possession  of  the  land  no 
one  will  be  dispossessed.  The  own- 
ers of  the  improvements  will  still  own 
them,  and  can  buy  and  sell  such  im- 
provements at  their  values,  as  will  be 
explained  in  the  exchange  system 
proposed. 


OVERPRODUCTION.  6/ 


OVERPRODUCTION. 

The  belief  that  panics  and  dull  times 
are  due  to  overproduction  is  wide- 
spread. It  has  its  basis  in  the  fallacy 
that  demand  is  a  fixed  quantity, 
virhereas  men's  wants  increase  with  the 
ability  to  gratify  them.  Overproduc- 
tion of  material  things  is  not  an  incon- 
cei viable  condition,  but  it  could  only 
be  possible  when  the  wants  of  the 
whole  community  were  supplied  ;  and 
it  is  absurd  to  say  this  is  the  case 
when  so  many  are  suffering  from  actual 
want.  A  man  may  be  able  by  his 
labor  to  produce  more  than  enough 
to  purchase  food,  clothing,  and  shelter ; 
if  he  does  so,  and  saves  a   part  of  his 


68         AN  EQUITABLE  EXCHANGE  SYSTEM. 

earnings,  we  do  not  look  upon  this  as 
overproduction  ;  we  call  it  accumula- 
tion, and  look  upon  it  as  a  commend- 
able and  worthy  act.  Most  men  would 
want,  besides  food,  clothing  and  shelter, 
various  objects  of  wealth  which  might 
add  to  their  pleasure.  If  a  man  were 
of  a  literary  turn,  he  might  desire  a  fine 
library ;  if  musical,  a  piano  ;  or  if  he 
had  a  taste  for  art,  he  could  create 
a  demand  for  paintings,  statuary,  etc. 
Very  few  men  but  would  desire  a 
beautiful  home  ;  others  might  want 
leisure  to  devote  to  study.  As  long 
as  such  wants  exist  and  remain  un- 
satisfied, there  is  no  overproduction. 
Carried  to  its  logical  conclusion,  over- 
production would  do  away  with  the 
necessity  for  work  ;  if  it  were  the  true 
cause  of   our    trouble  there  would    be 


OVERPRODUCTION.  69 

no  satisfactory  solution  of  the  labor 
problem. 

To  be  consistent,  the  overproduc- 
tionist  should  rejoice  in  fires,  floods, 
shipwrecks,  wars,  and  other  calamities 
which  cause  a  destruction  of  wealth : 
he  must  discourage  invention,  depre- 
cate the  use  of  labor-saving  machinery, 
and  advocate  restricted  production, 

I  have  no  doubt  you  have  all  heard 
such  ideas  advanced  as — "  Do  not  fires 
create  a  demand  for  labor?"  or,  "If 
we  have  war,  will  there  not  be  a  great 
demand  for  supplies  of  all  kinds  ? " 
If  fires  create  a  demand  for  labor, 
why  not  burn  up  our  city  ;  and  if  this 
would  not  be  sufficient  to  give  em- 
ployment to  the  idle,  we  might  create 
a  still  greater  demand  for  labor,  by 
burning     up      New     York     City    and 


70         AN  EQUITABLE  EXCHANGE  SYSTEM. 

Chicago.  Whatever  destroys  weahh 
already  produced,  whether  it  be  by 
means  of  fire,  flood,  shipwreck,  war, 
or  strikes,  deducts  from  the  sum  total 
of  wealth,  and  each  one  is  a  loser  in 
proportion  to  his  interest. 

When  labor-saving  machinery  was 
first  introduced,  the  poor,  half-starved 
workers  naturally  looked  upon  the 
machine  as  depriving  them  of  the 
opportunity  to  work.  They  saw  in 
numerous  instances  how  machinery  at 
the  outset  actually  brought  people  to 
want,  and  hence  the  aversion  to  the 
employment  of  machinery  which  even 
now  is  not  entirely  dispelled. 

A  machine  which  does  the  work  of 
ten  men,  apparently  throws  nine  of 
the  ten  out  of  employment.  What  it 
really  does,  or  should  do,  is  to  increase 


OVERPRODUCTION.  7I 

the  productive  power  of  labor  tenfold. 

The  greater  the  production  of  wealth 
the  more  there  is  to  divide.  If  by  a 
false  wage  system  the  workers  fail  to 
receive  their  share  of  the  advantage 
which  improved  methods  of  production 
brinor  about,  don't  blame  the  machine. 
If  consumption  fails  to  keep  pace  with 
production,  there  is  but  one  explana- 
tion of  it,  which  is,  that  the  wage- 
earners  only  get  a  fraction  of  the 
wealth  they  produce.  It  is  impossible 
for  a  wacre  class  to  create  a  demand 
for  ten  billions  of  wealth  with  five 
billions  in  wages  to  do  it  with.  Give 
the  producer  in  wages  that  which  he 
is  entitled  to, — the  full  value  of  his 
labor, — and  there  can  be  no  general 
overproduction. 

It    is    possibh-    to    create    a    glut    in 


^2         AN  EQUITABLE  EXCHANGE  SYSTEM. 

almost  any  commodity  if  sufficient 
labor  and  capital  be  devoted  to  its 
production ;  but  general  overproduc- 
tion means  too  much  of  everything. 
The  reason  why  men  work  and  pro- 
duce wealth  is  to  satisfy  their  wants, 
and  when  all  wants  are  supplied  there 
is  no  longer  any  reason  why  men 
should  work.  But  don't  count  too 
heavily  on  the  ability  of  mankind  to 
produce  too  much  wealth. 

The  following  article,  taken  from 
Bastiat's  "Political  Economy,"  edited 
by  David  A.  Wells,  will  show  how  slow 
has  been  the  accumulation  in  the  past, 
and  may  serve  as  an  antidote  to 
those    who    fear    overproduction :  * 

"By  the  census  of  1890  the  aggre- 
gate   wealth     of    the    United     States, 

*A  few  changes  are  made  in   the   figures  to   make   them 
correspond  with   later  census   reports. 


OVERPRODUCTION.  73 

making  all  due  allowances  for  dupli- 
cation in  valuation,  was  probably  not 
in  excess  of  seventy-two  thousand  mil- 
lions of  dollars.  But  vast  as  the  sum 
is,  and  difficult  as  it  certainly  is  for 
the  mind  to  form  an  adequate  con- 
ception of  it  in  the  aggregate,  it  is 
nevertheless  most  interesting  to  in- 
quire what  it  is  that,  measured  by  hu- 
man effort,  it  represents.  And  the 
answer  is  that  it  represents,  first,  a 
value,  supposing  the  whole  sum  to  be 
apportioned  equally  among  an  as- 
sumed population  of  seventy  millions, 
of  about  one  thousand  and  twenty- 
five  dollars  to  each  individual : — not  a 
large  amount  if  one  were  to  depend 
on  its  interest  at  six  per  cent,  as  a 
means  of  support ;  and  second,  it  rep- 
resents   the    surplus    result    of   all    the 


74         AN  EQUITABLE  EXCHANGE  SYSTEM. 

labor,  skill  and  thought  exerted,  and 
all  the  capital  earned  and  saved,  or 
brought  into  the  country,  for  the  last 
two  hundred  and  fifty  years,  or  ever 
since  the  country  became  practically 
the  abode  of  civilized  men. 

"  But,  with  capital,  or  the  instru- 
mentalities for  creating  abundance,  in- 
creasing thus  slowly,  it  certainly 
stands  to  reason  that  we  need  to  be 
exceedingly  careful,  lest  by  doing  any- 
thing to  impair  its  security,  we  impair 
also  its  rate  of  increase  ;  and  we  ac- 
cordingly find,  as  we  should  naturally 
expect  from  the  comparatively  high 
education  of  our  people,  that  the  idea 
of  any  direct  interference  with  the 
rights  of  property  meets  with  but  lit- 
tle favor  upon  this  side  of  the  Atlan- 
tic.    But,  at  the  same  time,  we  cannot 


OVERPRODUCTION.  75 

deny  that  many  of  the  most  intelli- 
gent men  and  women  interested  in 
the  various  labor  reform  movements 
in  this  country,  taking  as  the  basis  of 
their  reasoning  the  large  nominal  ag- 
gregate of  the  national  wealth,  and 
the  large  advance  which  has  recently 
been  made  in  the  power  of  produc- 
tion, and  considering  them  in  the  ab- 
stract, irrespective  of  time  or  distribu- 
tion, have  nevertheless  adopted  the 
idea,  vague  and  shadowy  though  it 
may  be,  that  the  amount  of  the  pres- 
ent annual  product  of  labor  and  capi- 
tal is  sufficient  for  all  ;  and  that  all 
that  it  is  necessary  to  do  to  insure 
comfort  and  abundance  to  the  masses 
is  for  the  State  somehow  to  inter- 
vene, either  by  fixing  the  hours  of 
labor,    or    the     rates    of    compensation 


76         AN  EQUITABLE  EXCHANGE  SYSTEM. 

for  service,  or  the  use  of  capital,  and 
compel  its  more  equitable  distribution. 
"  Now,  that  a  more  equitable  dis- 
tribution of  the  results  of  production 
is  desirable,  and  that  such  a  distribu- 
tion does  not  at  present  take  place 
to  the  extent  that  it  might  without 
impairing  the  exercise  of  individual 
freedom,  must  be  admitted ;  but,  be- 
fore undertaking  to  make  laws  on  the 
subject,  is  it  not  of  importance  to  first 
find  out  how  much  we  have  really 
got  to  divide  ?  Let  us  see.  Stated 
in  money,  the  maximum  value  of  the 
annual  product  of  the  United  States 
is  not  in  excess  of  $10,000,000,000 
(probably  less)  ;  of  which  the  value  of 
the  annual  product  of  all  our  agricul- 
ture, our  cotton  and  our  corn,  our 
beef    and    our     pork,     our     hay,     our 


OVERPRODUCTION.  ^J 

wheat,  and  all  our  fruits,  is  returned 
by  the  last  census,  with  undoubted  ap- 
proximate accuracy,  at  less  than  one- 
half  that  sum,  or  in  round  numbers 
at  $5,000,000,000. 

"  But,  while  this  sum  of  estimated 
yearly  income,  like  the  figures  which 
report  the  aggregate  of  our  national 
wealth,  is  so  vast  as  to  be  almost  be- 
yond the  power  of  mental  conception, 
there  is  yet  one  thing  about  it  which 
is  certain  and  can  be  readily  compre- 
hended, and  that  is,  that  of  this  whole 
product,  whether  we  measure  it  in 
money  or  in  any  other  way,  fully 
nine-tenths,  and  probably  a  larger 
proportion,  must  be  immediately  con- 
sumed in  order  that  we  may  simply 
live,  and  make  good  the  loss  and 
waste    of    capital    previously    accumu- 


78         AN  EQUITABLE  EXCHANGE  SYSTEM. 

lated,  leaving  not  more  than  one-tenth 
to  be  appHed  in  the  form  of  accumu- 
lation for  effecting  a  future  increased 
production  and  development. 

"  Or,  to  state  the  case  differently, 
and  at  the  same  time  illustrate  how 
small,  even  under  the  most  favorable 
circumstances,  can  be  the  annual  sur- 
plus of  production  over  consumption, 
it  is  only  necessary  to  compare  the 
largest  estimate  of  the  value  of  our 
annual  product  with  our  largest  of 
the  aggregate  national  wealth  to  see 
that,  practically,  after  tvv^o  hundred 
and  fifty  years  of  toiling  and  sav- 
ing, we  have  only  managed  as  a 
nation  to  gret  about  three  and  a 
half  years  ahead  in  the  way  of 
subsistence  ;  and  that  now  if,  as  a 
whole    people,    we    should    stop    work- 


OVERPRODUCTION.  79 

ing  and  producing,  and  repairing 
waste  and  deterioration,  and  devote 
ourselves  exclusively  to  amusement 
and  idleness,  living  on  the  accumula- 
tion of  our  former  labors  or  the 
labor  of  our  fathers,  four  years  would 
be  more  than  sufficient  to  starve 
three-fourths  of  us  out  of  existence, 
and  reduce  the  other  one-fourth  to 
the  condition  of  semi-barbarism  ;  a  re- 
sult, on  the  whole,  which  it  is  well  to 
think  of  in  connection  with  the  pro- 
mulgation of  certain  new  theories, 
that  the  best  way  of  increasing  abun- 
dance, and  promoting  comfort  and 
happiness,  is  by  decreasing  the  aggre- 
gate and  opportunities  of  production. 
In  fact,  there  are  few  things  more 
transitory  and  perishable  than  that 
which    we    call    wealth  ;    and,    as     spe- 


8o         AN  EQUITABLE  EXCHANGE  SYSTEM. 

cifically  embodied  in  the  ordinary 
forms  we  see  about  us,  its  duration  is 
not,  on  the  average,  in  excess  of  the 
life  of  a  generation. 

"  The  railroad  system  of  the  coun- 
try is  estimated  to  have  cost  more 
than  nine  thousand  millions  of  dol- 
lars, but  if  left  to  itself  without  re- 
newals or  repairs,  its  value  as  prop- 
erty in  ten  years  would  entirely  van- 
ish ;  and  so  also  with  our  ships,  our 
machinery,  our  tools  and  implements, 
and  even  our  land,  when  cultivated 
without  renovation.  For  it  is  to  be 
remembered  that  those  same  forces  of 
nature  which  we  have  mastered  and 
made  subservient  for  the  work  of  pro- 
duction, are  also  our  orreatest  natural 
enemies,  and  if  left  to  themselves  will 
tear  down  and  destroy  much  more  rap- 


OVERPRODUCTION.  8l 

idly  than,  under  our  guidance,  they  will 
aggregate  and  build  up.  A  single 
nio-ht  was  sufficient  in  Chicago  to  ut- 
terly  destroy  what  was  equivalent  to 
one-quarter  of  the  whole  surplus 
product  which  during  the  preceding 
year  the  nation  had  accumulated  ;  and 
of  all  the  material  wealth  of  the  o-reat 

o 

and  rich  nations  of  antiquity,  of  Egyp- 
tian, Assyrian,  Tyrian  and  Roman 
civilization,  nothinof  whatever  has  come 
down  to  us,  except,  singularly  enough, 
those  things  which,  like  their  tombs 
and  public  monuments,  never  were 
possessed  of  money  valuation.  But 
the  inferences  which  we  are  warranted 
in  drawing  from  these  facts  and  fig- 
ures are  by  no  means  exhausted. 
.Supposing  the  value  of  our  annual 
product, — ten     thousand     millions, — to 


82         AN  EQUITABLE  EXCHANGE  SYSTEM. 

be  equally  divided  amongst  our  pres- 
ent population  of  seventy  millions, 
then  the  average  income  of  each  indi- 
vidual would  be  $142.50  per  annum, 
out  of  which  food,  clothing,  fuel,  shel- 
ter, education,  traveling  expenses,  and 
means  of  enjoyment,  are  to  be  pro- 
vided, all  taxes  paid,  all  waste,  loss 
and  depreciation  made  good,  and  any 
surplus  available  as  new  capital  added 
to  former  accumulations. 

"  Now,  if  at  first  thought  this  de- 
duction of  the  averaofe  individual  in- 
come  of  our  people  seems  small,  it 
should  be  remembered  that  it  is 
based  on  an  estimate  of  annual  na- 
tional product  greater  both  in  the  ag- 
gregate and  in  proportion  to  num- 
bers than  is  enjoyed  by  any  other  na- 
tion,  our  compeers  in  wealth  and  civ 


OVERPRODUCTION,  83 

ilization  ;  and  further,  that  this  $142.50 
is  not  the  sum  which  all  actually  re- 
ceive as  income,  but  the  average  sum 
which  each  would  receive  were  the 
whole  annual  product  divided  equally. 
But,  as  a  practical  matter,  we  know 
that  the  annual  product  is  not  divided 
equally ;  and,  furthermore,  that  as 
lone  as  men  are  born  with  different 
natural  capacities  it  never  will  be  so 
divided.  Some  will  receive  and  do 
receive  as  their  share  of  the  annual 
product  the  annual  average  we  have 
stated,  multiplied  by  hundreds  or 
even  thousands,  which  of  course  ne- 
cessitates that  very  many  others  shall 
receive  proportionately  less.  And 
how  much  less  is  indicated  by  recent 
investigations,  which  show  that  for  the 
whole  country  the  average  earnings  of 


84         AN  EQUITABLE  EXCHANGE  SYSTEM. 

laborers  and  unskilled  workmen  are 
not  in  excess  of  $500  per  annum,  the 
maximum  amount  being  received  in 
New  England,  and  the  minimum  in 
the  Southern,  or  former  slave-holding 
States,  which  sum,  assuming  that  the 
families  of  all  these  men  consist  of 
five — two  adults  and  three  children — 
would  give  ^100  as  the  average 
amount  which  each  individual  of  the 
class  referred  to  produces,  and  also 
the  amount  to  which  each  individual 
must  be  restricted  in  consumption  ; 
for  it  is  clear  that  no  man  can  con- 
sume more  than  he  or  his  capital  pro- 
duces, unless  he  can  in  some  way  ob- 
tain the  product  of  some  other  man's 
labor  without  giving  him  an  equiva- 
lent for  it. 

"We   are    thus    led    to   the   conclu- 


OVERPRODUCTION.  85 

sion  that,  notwithstanding  the  wonder- 
ful extent  to  which  we  have  been  en- 
abled to  use  and  control  the  forces 
of  nature,  for  the  purpose  of  increas- 
ing the  power  of  production,  the  time 
has  not  yet  come  when  society  in  the 
United  States  can  command  such  a 
degree  of  absolute  abundance  as  to 
justify  and  warrant  any  class  or  indi- 
vidual, rich  or  poor,  and  least  of  all 
those  who  depend  upon  the  product 
of  each  day's  labor  to  meet  each 
day's  needs,  in  doing  anything  which 
can  in  any  way  tend  to  diminish 
abundance  ;  and,  furthermore,  that  the 
agency  of  law,  even  if  invoked  to  the 
fullest  extent  in  compelling  distribu- 
tion, must  be  exceedingly  limited  in 
its  operations. 

"  Let  the  workingman  of  the  United 


86         AN  EQUITABLE  EXCHANGE  SYSTEM. 

States,  therefore,  in  every  vocation, 
demand  and  strive  if  he  will  for  the 
largest  possible  share  of  the  joint 
products  of  labor  and  capital  ;  for  it 
is  the  natural  right  of  everyone  to 
seek  to  obtain  the  largest  price  for 
that  which  he  has  to  sell.  But  if,  in 
so  doing,  he  restricts  production,  and 
so  diminishes  abundance,  he  does  it 
at  his  peril ;  for,  by  a  law  far  above 
any  legislative  control  or  influence, 
whatever  increases  scarcity  not  only 
increases  the  necessity  but  diminishes 
the  rewards  of  labor. 

"  Street  processions,  marching  after 
flags  and  patriotic  mottoes,  even  if 
held  every  day  in  the  week,  will 
never  change  the  conditions  which 
govern  production  and  compensation. 
Idleness    produces    nothing   but  weeds 


OVERPRODUCTION.  8/ 

and  rust ;  and  such  products  are  not 
marketable  anywhere,  though  society 
often  pays  for  them  most  dearly." 


88         AN  EQUITABLE  EXCHANGE  SYSTEM. 


INFLUENCE   OF   POPULATION. 

.  The  Malthusian  doctrine,  or  the  ten- 
dency of  population  to  increase  faster 
than  the  means  of  subsistence,  is  a 
recognized  principle  in  economics. 
While  some  attach  great  importance  to 
the  theory,  others,  like  Henry  George, 
refuse  to  recognize  it  even  as  a  ten- 
dency ;  or,  if  recognized,  to  be  classed 
in  the  same  category  as  the  return  of 
the  glacial  period,  or  the  exhaustion 
of  the  supply  of  oxygen. 

It  appears  to  me  that  in  Mr. 
George's  efforts  to  disprove  the  doc- 
trine, he  has  gone  to  the  other  ex- 
treme: he  has  taken  Mr.  Malthus  too 
literally ;     for     instance,     Mr.     Malthus 


INFLUENCE  OF  POPULATION.       89 

simply  supposes  a  case  when  he 
speaks  about  population  increasing  in 
a  geometrical  ratio,  while  the  means  of 
subsistence  only  increase  in  an  arith- 
metical ratio  ;  he  did  not  lay  it  down  as 
a  law.  In  fact,  Mr.  Malthus  insists  that 
the  principle  of  population  must  be 
looked  upon  as  a  tendency  only.  He 
says :  "  We  have  already  seen  that 
the  limit  to  the  population  of  commer- 
cial nations,  is  the  period  when,  from 
the  actual  state  of  foreign  markets, 
they  are  unable  regularly  to  import  an 
increasing  quantity  of  food.  And  the 
limit  to  the  population  of  a  nation 
which  raises  the  whole  of  its  food  on 
its  own  territory  is,  where  the  land 
has  been  so  fully  occupied  and  worked, 
that  the  employment  of  another 
laborer  on  it,  will  not,  on  an  average, 


90         AN  EQUITABLE  EXCHANGE  SYSTEM. 

raise  an  additional  quantity  of  food, 
sufficient  to  support  a  family  of  such 
a  size  as  will  admit  of  an  increase  of 
population.  This  is  evidently  the  ex- 
treme practical  limit  to  the  progress 
of  population,  which  no  nation  has 
ever  reached,  nor  indeed  ever  will." 

"There  is,  however,  a  limit  which, 
if  the  capital  and  population  of  a 
country  continue  increasing,  they  must 
ultimately  reach,  and  cannot  pass  ;  and 
that,  upon  the  principle  of  private 
property,  must  be  far  short  of  the 
utmost  capacity  of  the  earth  to  produce 
food."  "That  the  ultimate  check  to 
population  (want  of  food)  is  never  the 
immediate  check  except  in  cases  of 
actual  famine." 

It  seems  to  me  that  it  is  no  reflec- 
tion on  the  bounty  of  nature  to  admit 


INFLUENCE  OF  POPULATION.       9I 

a  mere  tendency;  and  with  the  qualifi- 
cations made  by  Mr.  Malthus  it  seems 
to  need  no  proof ;  it  is  self-evident 
there  is  a  limit  to  the  production  of 
food.  With  all  the  improvements 
which  have  come  down  from  past  ages, 
we  are  still  unable  to  produce  more 
than  a  certain  quantity  of  cattle  to  a 
given  area. 

The  mind  assents  to  a  possible  limit 
in  this  direction,  but  not  so  with  popu- 
lation. When  considering  the  possi- 
bility of  population  increasing,  we  must 
admit  that  there  must  be  some  natural 
check  ;  and,  as  Malthus  states,  this 
check  is  not  the  limit  set  by  the 
inability  to  raise  food.  The  stationary 
period  would  be  reached  when  the  in- 
creasing effort  necessary  to  support  a 
family  in  that  degree  of  comfort  which 


92         AN  EQUITABLE  EXCHANGE  SYSTEM. 

is  considered  essential,  is  no  longer 
effective. 

I  agree  with  Henry  George,  that  it 
is  absurd  to  claim  that  poverty,  as  it 
exists  to-day,  is  due  to  such  tendency; 
we  have  not  come  anywhere  near  to 
the  stage  of  diminishing  returns  :  the 
earth  abounds  with  natural  wealth, 
millions  of  acres  are  uncultivated. 
Even  in  England  the  limit  of  cultiva- 
tion is  nowhere  near  attained.  "  The 
soil  now  produces  eight  times  as  much 
food  as  it  produced  five  hundred  years 
ago.  In  those  days  half  the  arable 
land  lay  in  fallow,  the  amount  of  wheat 
produced  averaging  but  eight  bushels 
to  the  acre. 

There  was  no  artificial  grass  ;  clover 
was  unknown,  cattle  were  small  and 
stunted  by  the  privation  and  hard  fare 


INFLUENCE    OF    POPULATION.  93 

of  winter  ;  the  average  weight  of  a 
good  ox  was  under  four  cwt,"  (Rog- 
ers, Pol.  Econ.) 

Prof.  Senior  states  that  "of  the 
37,000,000  acres  in  England  and 
Wales,  not  over  85,000,  less  than  one 
four-hundredth  part,  are  in  a  state  of 
high  cultivation,  and  that  5,000,000 
acres  are  waste."  He  estimates  the 
possibilities  of  production,  with  proper 
application  of  fertilizers,  deep-soil  plow- 
ing, drainage,  etc.,  to  be  more  than 
ten  times  the  present  output. 

Edward  Atkinson  states  :  "  It  is 
absurd  to  attempt  to  measure  the 
power  of  subsistence.  No  man  yet 
knows  the  productive  capacity  of  a 
single  acre  of  land  anywhere  in  re- 
spect to  food.  The  whole  existing 
population  of   the    globe,   estimated    at 


94         AN  EQUITABLE  EXCHANGE  SYSTEM. 

1,400,000,000  persons,  could  find  com- 
fortable standing  room  within  the  limits 
of  a  field  ten  miles  square."  Penn- 
sylvania could  give  each  person  twelve 
hundred  square  feet  of  space.  We 
can  raise  wheat  enoug-h  on  a  small 
part  of  the  territory  of  the  United 
States  to  feed  the  world. 

Our  farmers  complain  of  the  fact 
that  they  are  compelled  to  sell  their 
produce  at  prices  which  enable  them 
to  make  but  a  scant  living.  Fruit  is 
permitted  to  rot  on  the  trees,  rather 
than  to  go  to  the  expense  and  risk 
of  shipping  it  to  market,  I  know  of 
one  instance  of  a  farmer  within  ten 
miles  of  Philadelphia,  who  raised  1200 
bushels  of  sweet  potatoes,  and  could 
not  sell  the  lot  for  as  much  as  would 
pay  the  cost  of  transportation. 


INFLUENCE  OF  POPULATION.       95 

Of  course  such  cases  are  excep- 
tional, but  they  go  to  show  that  the 
trouble  is  not  due  to  a  shortac^e  of 
food.  Tens  of  thousands  of  worthy 
people  in  the  city  want  the  food,  but 
through  inability  to  market  the  one 
commodity  they  have  for  sale, — their 
labor, — are  prevented  from  purchasing 
the  farmer's  supplies. 


96         AN  EQUITABLE  EXCHANGE  SYSTEM, 


MONEY    AND    VALUE. 

The  need  of  money  springs  out  of 
what  Prof.  Jevons  calls  a  double  co- 
incidence in  barter.  Thus,  if  a  tailor 
desired  to  exchange  a  coat  for  a  pair 
of  shoes,  he  must  first  find  a  party 
who  has  shoes  to  exchange,  and  sec- 
ondly, a  party  who  has  shoes  to  ex- 
change who  wants  a  coat.  Another 
difficulty  in  barter  is  to  settle  differ- 
ences in  value.  Thus,  if  the  parties 
to  the  exchange  should  agree  that 
the  coat  was  worth  twice  as  much  as 
the  shoes,  it  would  be  necessary  for 
the  tailor  to  accept,  in  settlement  of 
the    balance,    articles    he   did    not    re- 


MONEY  AND  VALTTE.  97 

quire,  or  to  give  credit  to  the  shoe- 
maker until  such  time  as  he  mieht 
require  another  pair  of  shoes. 

An  amusing  incident  illustrating  the 
need  of  money  is  mentioned  by  Prof. 
Jevons:  "Some  years  since,  Mile.  Zelie, 
a  singer  in  the  Theatre  Lyrique,  in 
Paris,  made  a  professional  tour  around 
the  world,  and  gave  a  concert  in  the 
Society  Islands.  In  exchange  for  an 
air  from  Norma  and  a  few  other 
songs  she  was  to  receive  a  third  of 
the  receipts.  When  counted,  her 
share  was  found  to  consist  of  three 
pigs,  twenty-three  turkeys,  forty-four 
chickens,  five  thousand  cocoanuts,  be- 
sides considerable  quantities  of  ba- 
nanas, lemons  and  oranges.  In  Paris, 
as  th(^  [)riina  donna  remarks  in  her 
lively  letter  printed  by  I\lons.  Wolow- 


98         AN  EQUITABLE  EXCHANGE  SYSTEM. 

ski,  this  amount  of  live-stock  and 
vegetables  might  have  brought  four 
thousand  francs,  which  would  have 
been  good  remuneration  for  five 
songs.  In  the  Society  Islands,  how- 
ever, pieces  of  money  were  very 
scarce,  and  as  Mademoiselle  could  not 
consume  any  considerable  portion  of 
the  receipts  herself,  it  became  neces- 
sary in  the  meantime  to  feed  her  pigs 
and  the  poultry  with  the  fruit." 

In  order  for  exchange  relations  to 
exist,  it  will  be  necessary  to  devise  a 
method  whereby  a  comparison  can  be 
made  of  the  various  commodities  and 
thereby  determine  the  value  relation. 
Our  present  method  is  to  make  a 
definite  quantity  or  weight  of  gold  a 
standard  of  value.  By  comparing  the 
value  of  any  commodity  with  the  gold, 


MONEY  AND  VALUE.  99 

we  are  supposed  to  arrive  at  the 
value  of  any  other  commodity.  But 
how  do  we  get  at  the  vahie  of  the 
gold  ?  Place  a  piece  of  gold  by  the 
side  of  a  pair  of  shoes.  You  can 
compare  their  weight,  color  or  other 
physical  properties,  but  this  will  not 
give  you  their  value  relations.  The 
idea  of  a  standard  is  something  which 
is  invariable.  The  standard  of  weight 
is  the  pound  avoirdupois,  which  is 
equal  to  27.7  cubic  inches  of  distilled 
water  ;  the  standard  of  measure  is  the 
yard,  which  is  equal  to  the  length  of 
a  pendulum  beating  sixty  seconds  to 
the  minute  ;  but  you  might  as  well 
fix  on  a  block  of  ice  in  summer  as  a 
standard  of  weight  as  ui)on  gold  as  a 
standard  of  value  \'ahic  is  a  rela- 
tion whic]i   must  be  compared   in   order 


100       AN  EQUITABLE  EXCHANGE  SYSTEM. 

to  be  ascertained.  If  you  should 
double  the  number  of  pound  weights 
or  yardsticks,  would  that  alter  the  re- 
lation between  a  pound  weight  or 
yardstick  and  the  thing  that  is  to  be 
weighed  or  measured  ?  Manifestly,  no. 
But  now  suppose  that  you  double  the 
quantity  of  your  standard  of  value — 
gold.  In  so  doing,  do  you  alter  the 
relation  between  the  goods  and  the 
gold?  Unquestionably,  yes.  It  will, 
therefore,  be  seen  that  there  is  no 
such  thing  as  a  standard  of  value.  If 
gold  itself  possessed  value  in  the 
same  sense  that  a  pound  of  iron  pos- 
sesses weight,  then  it  would  be  an 
easy  matter  to  compare  values ;  but 
it  is  essential  to  the  existence  of 
value  that  something  else  be  present 
to   compare   it   with,   whereas   with   the 


MONEY  AND  VALUE.  lOI 

pound  of  iron  it  exists  by  virtue  of 
the  force  of  gravity. 

There  are  two  ways  to  determine 
value  relations,  but  before  considering 
these  methods  let  us  inquire  into  the 
character  of  the  various  commodities 
which  constitutes  a  nation's  wealth. 
We  can  separate  these  into  two 
classes  : 

First,  Those  which  are  strictly  lim- 
ited in  quantity,  and  by  their  nature 
cannot  be  increased  or  reproduced, 
such  as  rare  coins,  old  books,  curiosi- 
ties, antiquities,  statuary,  paintings, 
and  objects  of  a  similar  nature. 

Second,  Those  which  can  be  indefi- 
nitely increased  in  quantity  by  the 
application  of  labor  and  capital.  To 
this  class  belong  all  the  manufactured 
wealth    and    agricultural    products    of 


I02       AN  EQUITABLE  EXCHANGE  SYSTEM. 

every  description.  While  we  may  ad- 
mit that,  theoretically,  there  is  a  limit 
to  the  products  of  the  soil,  this  limit 
has  never  yet  been  attained,  so  they 
may  be  properly  included  in  this 
class.  The  second  class  is  by  far  the 
more  important  of  the  two,  and  in- 
cludes probably  ninety-nine  per  cent, 
of  the  entire  wealth  of  the  country. 

Let  us  now  consider  the  two  meth- 
ods of  determininof  the  value  relation 
with  the  view  of  reaching  a  conclu- 
sion as  to  which  of  the  two  will  best 
promote  the  interests  of  the  pro- 
ducers. The  first  is  the  supply  and 
demand  method. 

It  is  evident  that  it  would  be  very 
unjust  for  exchanges  to  be  based  on 
quantity  alone.  Because  there  hap- 
pened   to    be    fifty    pairs    of   shoes    in 


MONEY  AND  VALUE.  IO3 

the  market  to  one  hat,  is  no  reason 
why  one  hat  should  be  worth  fifty 
pairs  of  shoes.  And  it  is  equally 
clear  that  demand  alone  should  not 
determine  the  rate  of  exchangfe. 

How  can  you  compare  the  demand 
for  a  steam  yacht  with  the  demand 
for  a  suit  of  clothes  ?  Everyone 
would  want  a  suit  of  clothes ;  very 
few  want  a  steam  yacht.  If  demand 
alone  were  to  settle  value,  a  suit  of 
clothes  would  be  worth  more  than  a 
steam  yacht.  If  we  consider  both 
supply  and  demand,  without  taking 
into  consideration  the  cost  of  produc- 
tion, it  will  bring  about  grave  injus- 
tice in  exchange,  as  this  system  offers 
no  incentive  for  industry  and  thrift, 
but,  on  the  contrary,  places  a  pre- 
mium on  laziness. 


I04       AN  EQUITABLE  EXCHANGE  SYSTEM. 

Let  one  class  of  producers  invent 
machinery,  work  industriously,  and  use 
every  method  which  we  would  uphold 
as  commendable  and  desirable,  and 
what  is  the  result  ?  An  increased 
production,  and  consequently  a  fall  in 
its  value  as  compared  with  other  com- 
modities. Now,  if  the  makers  of  any 
other  commodity  are  lazy  and  thrift- 
less, they  will  receive  in  the  higher 
price  due  to  restricted  production  as 
much  as  if  they  had  used  all  the 
energy  possible.  This  is  the  ten- 
dency under  our  present  system. 

It  may  be  argued  that  under  a 
state  of  freedom,  if  one  class  of  pro- 
ducers overstock  the  market,  that  the 
fall  in  values  would  cause  laborers  to 
leave  the  industry  which  offers  small 
remuneration  and  enter  one  which  of- 


MONEY  AND  VALUE.  IO5 

fers  greater  rewards.  If  everyone  were 
master  of  all  trades  this  mobility  of 
labor,  which  is  assumed  by  econo- 
mists, would  work  to  a  charm  ;  but 
here  is  the  difficulty.  How  many  of 
the  half-starved  miners  seek  to  better 
their  condition  by  changing  their 
trades  ?  If  they  do,  it  must  be  in 
some  Hne  which  requires  no  special 
training,  and  ninety-nine  chances  out 
of  a  hundred,  such  avenues  of  em- 
ployment are  already  filled. 

We  will  now  examine  the  second 
method  of  determining  values,  cost  of 
production,  which  is  dependent  upon 
the  quantity  of  labor  and  expenses 
necessarily  attached  to  the  production. 
Hy  quantity  of  labor  I  mean  quantity 
compared  with  its  efficiency.  Thus 
the    product    of    an    unskilled    laborer 


I06       AN  EQUITABLE  EXCHANGE  SYSTEM. 

would  not  equal  the  product  of  a 
skilled  mechanic,  either  in  quantity  or 
quality.  Two  hours'  work  of  the 
former  might  equal  but  one  hour's 
work  of  the  latter.  Now,  as  a  mat- 
ter of  fact,  the  cost  of  production  is 
taken  into  consideration  in  fixing  the 
price  of  all  manufactured  commodi- 
ties. Both  supply  and  demand  also 
affect  values  under  our  present  sys- 
tem. I  am  aware  that  modern  au- 
thorities claim  that  values  cannot  be 
determined  by  cost  of  production. 
Macleod  insists  that  cost  of  produc- 
tion can  only  affect  value  in  so  far  as 
it  affects  supply.  The  criticism  of 
Karl  Marx's  value  theory,  by  Dr. 
Bohm-Bawerk,  is  the  most  able  of  any 
I  have  read,  and  yet  he  admits  all  that 
is  necessary  to  establish  my  claim. 


MONEY  AND  VALUE.  I07 

I  assert : 

First,  That  a  system  of  exchange 
based  upon  cost  of  production  is  en- 
tirely practicable,  confining  it  to  those 
goods  which  may  be  indefinitely  in- 
creased. 

Second,  That  because  the  value  of 
such  goods  as  curiosities,  paintings, 
etc.,  may  only  be  determined  by  sup- 
ply and  demand,  is  no  reason  why  all 
values  must  be  settled  that  way. 

Dr.  Bohm-Bawerk,  in  his  criticism, 
inquires:  "Is  it  even  true  that  in 
all  goods  possessing  exchange  value, 
there  is  this  common  property  of  be- 
ing the  product  of  labor  ?  Is  virgin 
soil  a  product  of  labor,  or  a  gold 
mine,  or  a  natural  scam  of  coal  ? 
And  yet,  as  everyone  knows,  these 
often     have     a     very    high     exchange 


I08       AN  EQUITABLE  EXCHANGE  SYSTEM. 

value ;  and  how  can  an  element  that 
does  not  .  enter  at  all  into  one  class 
of  -  goods  possessing  exchange  value, 
be  put  forward  as  the  common  uni- 
versal principle  of  exchange  value," 

In  putting  forward  this  argument  he 
evidently  thinks  he  has  his  opponent 
"in  chancery."  But,  may  I  ask,  why 
has  virgin  soil,  or  a  gold  mine,  or  a 
natural  seam  of  coal,  value?  Is  it 
not  because  such  things  have  been 
made  property  and  become  the  sub- 
jects of  capitalistic  monopoly?  The 
coal  mines  are  beyond  price  in  their 
value  to  mankind,  but  such  natural 
agents  are  the  gratuitous  gifts  of 
nature  to  mankind,  they  should  be 
owned  in  common  and  mined  by  the 
state  in  the  interest  of  all,  and  the 
price   of    coal    would    then    be    deter- 


MONEY  AND  VALUE.  IO9 

mined  by  the  average  cost  of  produc- 
tion. 

The  proper  function  of  demand  is 
to  give  direction  to  production.  That 
which  men  have  to  exchange  is  their 
labor.  The  direction  this  labor  is  to 
take  ought  to  be  regulated  by  men's 
wants,  but  these  wants  must  not  con- 
trol the  value  relation. 


NOTE. 

Upon  what  does  the  value  of  gold  depend? 
Is  it  primarily  the  cost  of  production  ?  or  its 
scarcity?  or  is  the  coinage  price  fixed  by  gov- 
ernments the  determining  factor?  If  gold  is  to 
serve  as  a  standard  of  value,  an  absolute,  fixed, 
invariable  standard,  which  will  enable  us  to 
compare  values  of  commodities  at  all  times,  it 
is  of  first  importance  to  determine  this  question. 

If  cost  of  production  determines  its  value,  it 
is  evident   we   could    not    have  selected  a  com- 


no       AN  EQUITABLE  EXCHANGE  SYSTEM. 

modity  out  of  the  whole  category  of  objects  of 
wealth,  in  which  the  cost  of  production  is  more 
variable.  Here  is  a  gold  nugget  which  only  cost 
the  labor  of  stooping  to  appropriate.  The  Klon- 
dike miner  may  secure  ^300  a  day  for  his  work, 
while  thousands  of  others  may  search  months 
and  years  without  any  result.  How  can  you  get 
at  an  average  cost  of  production,  when  the  statis- 
tics of  the  returns  are  positively  unattainable  ! 
Only  those  commodities  the  production  of  which 
can  be  indefinitely  increased,  which  are  free  from 
restrictions,  and  are  not  the  subjects  of  monopoly 
in  any  shape  can  have  their  values  determined 
by  cost  of  production. 

Nature  has  placed  the  deposits  of  gold  in  un- 
known quantities  in  various  localities ;  these 
known  localities  are  soon  monopolized.  When 
the  owner  of  a  mine  gets  absolute  possession,  he 
can  secure  laborers  to  work  at  a  fixed  price, 
and  the  product  of  their  labor  he  sells  entirely 
regardless  of  the  cost  of  production.  The  United 
States  mint  purchases  all  that  he  can  procure  at 
$20.67  per  ounce,  whether  it  costs  him  ten  cents 
an  ounce  or  $100  an  ounce.  If  gold  were  not 
the  subject  of  monopoly  and  could  be  indefinitely 


MONEY  AND  VALUE.  1 1 1 

increased,  and  the  mints  would  simply  stamp 
the  coin  as  of  a  certain  weight  and  fineness, 
its  value  would  conform  to  the  cost  of  produc- 
tion. If,  for  instance,  gold  could  be  obtained 
from  seawater  at  a  cost  of  $5  an  ounce,  which 
has  been  recently  claimed  can  be  done,  and  pro- 
viding the  method  of  obtaining  it  were  known  to 
the  public,  the  value  would  fall,  but  how  would 
this  change  in  value  be  manifested  ?  If  the  gov- 
ernment still  coined  25.8  grains  of  gold  and 
called  it  a  dollar,  this  would  make  one  ounce 
nominally  worth  ^20.67.  The  prices  of  com- 
modities would  be  inflated  to  four  times  the 
present  rates.  It  is  evident  this  would  not  alter 
the  values  of  commodities,  but  their  values  would 
be  figured  on  a  different  ratio.  If  a  hat  is  worth 
$4,  a  pair  of  shoes  $2,  and  a  coat  $10,  an  infla- 
tion in  price  which  would  make  hats  worth  $16, 
shoes  $8,  and  coats  $40,  would  not  give  their 
respective  owners  any  power  to  get  more  in  ex- 
change ;  they  could  get  more  gold  but  it  would 
take  more  gold  to  buy  commodities. 

The  demand  for  gold  in  the  arts  takes  up  only 
a  fractional  portion  of  the  total  product  ;  the 
chief  demand  is  for  a  medium  of  exchange. 


112       AN  EQUITABLE  EXCHANGE  SYSTEM. 

The  price  of  gold  as  expressed  in  dollars  can 
never  change  by  reason  of  varying  cost  of  pro- 
duction, or  through  increase  in  quantity,  as  long 
as  the  government  coins  a  dollar  out  of  25.8 
grains  of  gold. 

A  lowering  cost  of  production  of  gold  may 
indeed  be  accompanied  by  falling  prices  of  com- 
modities. This  would  be  the  case  if  the  produc- 
tion of  wealth  in  the  aggregate  had  increased 
more  rapidly  than  the  increase  in  the  quantity  of 
gold,  which,  we  premise,  would  accompany 
lowering  cost.  Gold  is  the  one  commodity  in 
continual  and  universal  demand.  This  does  not 
spring  from  the  beauty,  utility,  or  any  inherent 
quality  of  the  gold,  but  owing  entirely  to  the 
demand  for  a  medium  of  exchange. 

The  adoption  of  an  equitable  exchange  system 
would  relegate  gold  to  its  proper  place.  The 
demand  would  be  limited  to  its  use  in  the  arts, 
and  its  price  determined  by  the  average  cost  of 
production. 


PLAN   IN   DETAIT..  II3 


PLAN    IN   DETAIL. 

The  question  of  supreme  importance 
to  the  producing  classes  is  to  secure 
the  value  of  what  they  produce. 

It  will  be  admitted  that  our  present 
competitive  system  enables  some  men 
to  acquire  enormous  fortunes,  entirely 
disproportionate  to  mere  differences  in 
intellectual  or  physical  capacity.  An 
Astor  can  accumulate  millions  without 
the  slightest  effort  on  his  part.  A 
Rockefeller  can,  by  practically  control- 
ing  the  petroleum  output,  accumulate  a 
fortune  which  represents  the  savings  of 
a  lifetime  of  100,000  men  ;  and  a  Gould 
or   a    VandjM'bilt     can    likewise   accpiirc; 


114       ^'^N  EQUITABLE  EXCHANGE  SYSTEM. 

enormous  wealth  by  controlling  rail- 
road transportation.  But  why  particu- 
larize ?  I  find  no  fault  with  the  in- 
dividuals ;  they  are  doing,  on  a  large 
scale,  what  every  man  endeavors  to 
do,  and  must  do,  to  succeed  under  our 
competitive  system  —  monopolize  as 
much  of  the  trade  as  possible.  No 
matter  whether  he  be  lawyer,  doctor, 
artist  or  merchant,  each  one  is  striving 
to  get  as  much  as  he  can.  It  is  the 
system  which  is  wrong,  and  I  believe 
that  the  evils  are  recognized  by  far 
the  greater  number  of  people,  but  they 
know  not  how  to  remedy  them. 

The  tree  which  absorbs  the  moisture, 
and  prevents  the  light  from  reaching 
the  ground,  has  many  branches,  and 
philanthropists  are  busy  hacking  off 
limbs,    while    new   ones    are    constantly 


PLAN   IN   DETAIL.  II5 

taking  their  place.  Whether  expended 
in  promoting  civil  service  reform,  or 
tariff  reform,  or  bimetalism,  or  charity, 
such  well-meant  effort  is  doomed  to  be 
ineffectual  in  remedying  the  trouble : 
we  must  remove  the  tree,  root  and 
branches  ;  and  this  can  be  done  only 
by  a  radical  change  in  our  exchange 
system. 

I  am  aware  of  the  difficulty  of  the 
task.  To  alter  our  entire  exchano-e 
system  cannot  but  be  attended  with 
results  which  will  bring  trouble  to 
many,  but  I  sincerely  believe  the  good 
which  would  follow  the  adoption  of  the 
exchange  system  I  offer,  will  make  the 
difficulties  seem  trivial  in  comparison. 
A  man  can,  if  he  possess  health  and 
strength,  and  under  ordinary  circum- 
stances, siijjj)()rl  a  family  with  th('  bare 


Il6       AN  EQUITABLE  EXCHANGE  SYSTEM. 

necessities  of  life  ;  but  it  requires  un- 
remitting toil  and  the  practice  of  strict 
economy  to  do  so.  What  has  he  to 
fall  back  on  when  sickness  overtakes 
him  ?  How  make  provision  for  old 
age? 

The  claim  that  the  laboring  classes 
were  never  so  well  off  as  now,  and  the 
attempt  to  prove  it  by  pointing  to 
savings-banks'  accumulations  and  gov- 
ernmental statistics  about  the  advance 
in  wages,  etc.,  may  satisfy  a  certain 
class  of  the  community,  who  have  pros- 
pered owing  to  their  superior  business 
qualifications,  or  to  fortunate  circum- 
stances, but  it  will  not  convince  the 
man  who  has  been  hunting  for  work 
for  months  unsuccessfully,  and  how 
many  such  there  are  at  the  present 
time,  every  employer  of  labor  knows. 


PLAN   IN   DETAIL.  II7 

No  wage  statistics  are  valid  that  do 
not  take  into  consideration  the  number 
of  workers  out  of  employment,  and 
the  number  working  on  short  time ; 
and  these  facts  were  not  considered 
in  the  Aldrich  report,  1893,  which  is 
so  frequently  quoted  by  those  who 
do  not  wish  to  recoo^nize  the  real  con- 
ditions. 

"Savings  bank  statistics  show  accu- 
mulations, but  by  whom?  The  records 
of  the  Surrogate  Court  of  New  York 
show  that  two-thirds  of  the  families 
not  only  possess  no  savings  bank 
account,  but  no  registered  property  of 
any  description."  '•  The  investigations 
of  the  Massachusetts  Labor  Bureau, 
under  General  Oliver,  show  that  the 
bulk  of  deposits  Ix^long  to  a  compara- 
tively small   class  of  well  to  do  citizens; 


Il8       AN  EQUITABLE  EXCHANGE  SYSTEM. 

manufacturers,  traders,  and  lawyers, 
who  use  these  banks  instead  of  banks 
of  deposit ;  capitalists,  persons  living 
on  their  incomes,  use  them  to  escape 
taxation  and  the  care  necessitated  by 
other  investments."     (Spahr.) 

Mr.  Giffen,  the  English  statistician, 
makes  the  claim  that  during  the  last 
half-century :  First,  Weekly  wages  have 
increased  about  sixty-five  per  cent.  ; 
Second,  That  the  hours  of  labor  have 
generally  been  reduced  ;  Third,  That 
yearly  wages  have  been  increased  one 
hundred  per  cent.  Just  how  a  reduc- 
tion in  the  hours  of  labor  should  in- 
crease the  yearly  wages  he  does  not 
explain. 

The  tenth  census  for  the  year  1880 
states  that  ^245,000,000  were  paid  by 
the  railroads  in  interest  and  dividends, 


PLAN   IN   DETAIL.  II9 

while  wages  and  salaries  were  but 
$221,000,000. 

The  inequality  in  the  distribution  of 
wealth  is  further  shown  by  the  fact 
that  one  per  cent,  of  the  families  in 
America  receive,  in  income  from  prop- 
erty alone,  as  much  as  fifty  per  cent, 
of  our  families  receive  in  both  income 
and  wages,  and  also  that  one  family 
out  of  every  one  hundred  owns  as 
much  wealth  as  all  the  remainder. 

It  is  not,  however,  the  purpose  of 
this  paper  to  prove  conditions  by  sta- 
tistics ;  the  question  with  which  we 
have  to  deal  is.  How  are  we  to  rem- 
edy these  recognized  evils  ? 

First,  then,  we  must  abolish  our  sys- 
tem of  exchange,  whereby  those  who 
possess  capital  can  secure  for  them- 
selves   the    wealth    which    is    produced 


I20       AN  EQUITABLE  EXCHANGE  SYSTEM. 

by  others.  Instead,  then,  of  exchanges 
being  carried  on  by  merchants,  under 
the  profit  system,  I  propose  that, — 
Governmental  warehouses  shall  be  es- 
tablished for  the  reception  of  all  useful 
commodities  ;  producers  may  bring 
their  products  to  these  warehouses  and 
receive  for  them  certificates  of  value, 
which  shall  be  based  upon  the  cost 
of  production.  The  cost  of  produc- 
tion is  to  be  determined  exactly  as 
it  is  done  now  in  all  factories,  except 
that  such  costs  will  be  much  easier 
to  reckon,  as  most  of  the  expenses 
which  are  necessarily  attached  to  dis- 
tribution under  the  present  system, 
such  as  salaries  of  commercial  travel- 
ers and  their  railroad  fares  and  hotel 
expenses,  advertising,  etc.,  which  are 
such    an    uncertain    element    in    figur- 


PLAN   IN   DETAIL.  121 

ing    costs,    will    be    done    away   with. 

To  further  simplify  the  cost  of  pro- 
duction, I  would  suggest  that  no7ninal 
wages  should  be  the  same  in  all  trades 
in  all  factories ;  those  workmen  receiv- 
ing the  highest  nominal  wages  whose 
trades  require  the  greatest  amount  of 
skill,  or  where  the  healthfulness  or  un- 
healthfulness,  agreeableness  or  dis- 
agreeableness  of  the  occupation  might 
justify  the  nominal  differences. 

With  a  market  for  their  production 
assured,  any  body  of  men  could  hire 
capital  and  engage  in  production. 
These  men  could  ag-ree  amonest  them- 
selves  as  to  the  division  of  the  certifi- 
cates of  value  received  for  their  pro- 
ducts. It  will  be  manifest  that  those 
factories  whicli  i)roduce  the  best  qual- 
ity of  work,  and    the   greatest  quantity 


122       AN  EQUITABLE  EXCHANGE  SYSTEM. 

of  it,  will  have  the  most  to  divide. 
Thus,  suppose  the  average  production 
of  one  hundred  men  were  equal  to 
$200.00  a  day.  If  the  operatives  of  a 
certain  factory,  by  adopting  improved 
methods,  and  by  exercising  care  and 
skill  in  the  manufacture,  should  turn 
out  goods  to  the  value  of  1^300.00  a 
day,  each  employee  would  receive  his 
share  of  the  increase,  proportionate  to 
his  nominal  wages ;  whereas  another 
factory,  whose  employees  did  not  make 
use  of  improved  methods,  and  were 
careless  and  lazy,  would  turn  out  a 
product  inferior  in  quality ;  conse- 
quently, while  nominally  receiving  the 
same  wages  as  in  all  other  similar  fac- 
tories, the  value  of  their  product  being 
less,  each  operator  would  suffer  a  loss 
proportionate  to  his  nominal  wages. 


PLAN   IN   DETAIL.  I23 

Thus  every  factory  would  be  directly 
interested  in  seeing  that  every  man  did 
his  duty.  If  a  man  were  inclined  to 
loaf  or  waste  his  time  his  fellow-work- 
ers would  object,  and  he  would  find 
his  nominal  wao-es  reduced. 

Would  not  such  a  system  encourage 
the  greatest  production  of  wealth,  pro- 
mote industry,  and  generally  be  an  in- 
centive for  every  man  to  do  his  best  ? 
It  ought  to  be  as  easy  for  a  man  to 
sell  goods  as  to  buy  them.  Consider 
what  an  enormous  waste  of  energy 
there  is  in  our  present  method  of  sell- 
ing ;  and  the  inequality  resulting  from 
the  compulsory  sale  of  goods  below 
their  value. 

The  governmental  warehouses  will 
necessarily  receive  only  those  goods 
whose    costs  of   production    are    ascer- 


124       AN  EQUITABLE  EXCHANGE  SYSTEM. 

tainable,  consequently  those  goods  the 
value  of  which  can  only  be  determined 
by  supply  and  demand,  would  be  ex- 
cluded. The  question  as  to  whether 
the  system  should  be  applied  to  agri- 
cultural products  has  its  difficulties, 
but  I  can  see  no  reason  why  they 
should  be  excluded.  Nature  has  so 
ordained  that  the  products  which  are 
the  most  perishable  are  generally  in 
the  orreatest  demand.  Dealers  are  not 
deterred  from  handling  fruits  because 
they  are  perishable  ;  the  public  pays  for 
such  losses  through  the  enhanced  price 
of  the  fruit.  By  far  the  greater  quan- 
tity of  such  products  are  not  only 
capable  of  being  preserved,  but  the 
average  cost  of  production  can  be 
ascertained.  Corn,  cotton,  wheat,  hay, 
etc.,    while    both    quality   and    quantity 


PLAN   IN   DETAIL.  I25 

are  largely  influenced  by  climatic  con- 
ditions, are  yet  generally  profitable  at 
certain  prices.  The  certificates  of 
value  will  be  redeemed  in  any  mer- 
chandise in  the  government  warehouse, 
and  when  redeemed  shall  be  cancelled. 

The  next  point  is  to  fix  the  prices 
at  which  the  governmental  warehouses 
shall  sell  the  products.  This,  it  must 
be  borne  in  mind,  should  be  the  actual 
cost,  but  as  the  cost  includes  expenses 
of  distribution,  losses  by  fire,  by  depre- 
cation and  other  contingencies,  a  per- 
centage must  be  placed  upon  the  goods 
to  defray  such  expenses. 

The  experience  of  the  Rochdale  co- 
operative stores  shows  how  small  the 
percentage  of  the  cost  of  distribution 
may  be  under  proper  management,  the 
parent  store  distriljuting,  annually,  over 


126       AN  EQUITABLE  EXCHANGE  SYSTEM. 

^2,000,000,  at  an  expense  of  less  than 
one  per  cent,  yet  they  have  to  work 
under  the  p-eneral  disadvantao^e  of  the 
competitive  system. 

Loss  by  fires  would  be  very  small, 
certainly  much  less  than  now,  as  every- 
body would  be  directly  interested  in 
preventing  them,  and  those  of  incen- 
diary origin  would  be  done  away  with, 
as  there  would  be  no  motive. 

Losses  by  depreciation  may  occur 
in  various  ways,  thus  :  Certain  goods 
might  get  shop-worn  ;  others  again 
might  cease  to  be  in  demand,  through 
the  introduction  of  superior  goods,  or 
by  producing  goods  which  might  be 
better  adapted  for  the  purpose  origi- 
nally intended  ;  or  from  goods  going 
out  of  style,  or  through  breakage,  or 
injury   by   moths,   rust,   and   in   various 


PLAN   IN   DETAIL.  I27 

Other  ways.  Such  losses  are  not  a 
very  important  factor  in  computing 
costs,  and  may  be  mostly  prevented 
by  ordinary  care. 

There  would  be  no  percentage 
added  to  cover  interest  charges,  nor 
for  rent,  and  but  a  very  small  per- 
centage would  be  necessary  to  cover 
repairs  to  property  used  by  the  State. 
If  land  were  owned  by  the  State,  any- 
one could  erect  a  house  on  any 
vacant  lot  and  receive  certificates  of 
value  on  its  completion.  Certain  re- 
strictions there  should  be  as  to  the 
character  of  the  buildings, — govern- 
ment inspection  of  the  construction, 
sanitary  regulations  governing  plumb- 
ing, etc.,  as  public  interests  would 
dictate.  Every  owner  of  a  house 
already    erected     could     secure     certifi- 


128       AN  EQUITABLE  EXCHANGE  SYSTEM. 

cates  of  value  for  it,  on  passing  title 
to  the  government  authorities,  at  the 
appraised  valuation. 

Leases  of  houses  deposited  with  the 
authorities  could  be  made  on  short 
time,  the  only  charge  being  a  sum 
necessary  to  keep  the  property  in  re- 
pair. Anyone  desiring  to  purchase 
such  properties  would  have  priority 
over   lessees. 

I  think  it  may  be  claimed,  conserva- 
tively, that  the  prices  paid  by  the  con- 
sumer, on  an  average,  exceed  the 
actual  cost  of  production  one  hundred 
per  cent.  The  manufacturer  makes  a 
profit  varying  from  twenty-five  to  fifty 
per  cent,  gross ;  the  wholesaler,  ten 
to  fifty  per  cent,  gross ;  the  retailer, 
twenty-five  to  fifty  per  cent,  gross. 

Of  course,  in  some  lines,  the  figures 


PLAN   IN   DETAIL.  1 29 

are  much  less,  but  in  many  others  the 
percentage  of  profit  is  much  greater. 
These  profits  are  necessarily  large, 
owing  to  the  cost  of  doing  business 
under  the  profit  system.  The  salaries 
of  commercial  travelers  and  their  ex- 
penses, cost  of  rent,  interest,  adver- 
tisinor,  etc.,  make  it  incumbent  on  the 
dealers  to  charge  this  apparently 
heavy  percentage.  Almost  all  such 
expenses  would  be  abolished  under 
this  system,  and  the  prices  to  the 
consumer  would  probably  not  be  over 
half  what  they  are  now.  Not  only 
would  there  be  this  great  gain  to  all 
consumers,  but  the  support  of  the  un- 
productive classes,  which  is  now  such 
a  heavy  Ijurden  on  the  workers,  would 
be  removed.  Most  of  the  occupations 
and     professions     which     arc     usually 


130       AN  EQUITABLE  EXCHANGE  SYSTEM, 

classed  as  unproductive  are  the  out- 
growth of  the  profit  system.  AboHsh 
the  cause  of  legal  difficulties,  which 
originate  in  trade,  and  most  of  the 
lawyers  would  have  to  seek  a  more 
useful  profession.  Bankers,  brokers, 
commercial  agencies,  collecting  agen- 
cies, insurance  companies  and  their 
army  of  clerks,  would  be  unnecessary. 
What  a  gain  this  would  be  to  the 
producing  classes  is  evident.  Every- 
one employed  in  such  professions  is 
a  tax  upon  production,  and  the  farm- 
ers and  mechanics  are  supporting 
them. 

The  merchant  pays  the  legal  fees, 
the  salary  of  the  commercial  traveler 
and  expenses,  the  expenses  of  the 
collecting  agencies,  and  is  the  chief 
support    of    the    bankers   and    clerks. 


PLAN   IN   DETAIL.  I3I 

The  consumer  pays  for  all  in  the  en- 
hanced price  of  the  goods  he  pur- 
chases. 

Then  consider  the  hundreds  of 
thousands  of  the  unemployed  who 
could,  under  the  system  here  advo- 
cated, always  find  employment.  The 
genus  tramp  would  be  exterminated. 
Those  who  were  able  to  work  and 
would  not  could  starve ;  those  who, 
from  sickness  or  misfortune,  were  un- 
able to  work,  could  be  provided  for 
by  the  public. 

I  have  been  asked  what  would  be- 
come of  the  widows  and  orphans  de- 
prived of  their  ability  to  live  upon  in- 
terest? I  answer.  What  does  become 
of  nine-tenths  of  them  at  the  present 
time,  without  interest,  and  with  oppor- 
tunities   to    make    a    living    restricted 


132       AN  EQUITABLE  EXCHANGE  SYSTEM. 

by  the  competitive  system  ?  Are  not 
the  nine-tenths  of  more  importance 
than  the  one-tenth  ?  And  can  anyone 
fail  to  see  that  these  widows  and  or- 
phans, who  constitute  the  greater 
number  of  those  deprived  of  their 
husbands  and  parents,  would  be  in- 
finitely better  off  under  a  system 
where  all  could  find  employment,  and 
where  equal  opportunities  were  guar- 
teed  to  all  ? 

Under  our  present  system  such  un- 
fortunates are  compelled  to  work  un- 
der very  disadvantageous  conditions, 
or  are  supported  by  relatives,  and  the 
ability  of  the  relatives  to  afford  such 
relief  would  not  be  lessened  by  hav- 
ing steady  employment  at  full  wages. 

All  enterprises  which  are  in  their 
nature      monopolistic      ought      to      be 


PLAN   IN   DETAIL.  I33 

owned  and  managed  by  die  State, 
such  as  railroads,  waterways,  tele- 
phones, telegraphs,  water  supply,  gas 
supply,  etc.  Public  interests  would 
not  be  best  promoted  by  permitting 
the  streets  of  a  city  to  be  used  by 
various  telephone,  telegraph  or  water 
companies,  competition  being  imprac- 
ticable. Government  ownership  is  the 
only  alternative,  unless  we  prefer  ex- 
tortion. It  is  a  reflection  on  the  in- 
telligence of  the  American  people  that 
they  permit  private  corporations  to 
control  transportation. 

The  evils  of  our  political  system, 
— corrupt  elections,  bribery  of  officials, 
and  the  scramble  for  office, — are  the 
natural  outgrowth  of  giving  control  of 
such  sources  of  income  to  private 
corporations.     These   corporations    are 


134       ^N  EQUITABLE  EXCHANGE  SYSTEM. 

conceived  in  corruption,  nourished  by 
bribery,  and  their  very  existence  now 
depends  on  controlling-  legislation  by 
fair  means  or  foul. 

A  corrupt  Council,  for  reasons  agree- 
able to  themselves,  will  give  away  or 
lease  for  an  indefinite  period  valuable 
franchises,  which  they  know  will  tend 
to  become  more  valuable  as  popula- 
tion increases  ;  and  yet  the  law  says, 
that  our  servants  having  sold  our 
birthright  for  a  mess  of  pottage,  we 
must  abide  by  it.  The  law  of  con- 
tract is  inviolable.  Future  genera- 
tions will  refuse  to  recoofnize  such 
titles,  because  corrupt  officials  cannot 
dispose  of  inalienable  rights. 

An  insurmountable  objection  to  this 
exchange  system  in  the  eyes  of  some 
is   the    danger    of    bribery   in    connec- 


PLAN   IN   DETAIL.  1 35 

tion  with  the  appraising  of  goods. 
Safeguards  to  prevent  discrimination 
that  suggest  themselves  would  be  to 
have  prices  fixed  by  a  board,  consist- 
ing of  representatives  from,  various 
factories,  in  connection  with  the  crov- 
ernment  experts.  Evidence  submitted 
as  to  the  cost  of  production  might  be 
required  from  each  factory.  Prices 
having  been  once  fixed  they  should 
be  altered  only  through  changes  in 
cost  of  production.  Thus,  to  encour- 
age invention,  if  it  should  be  deemed 
necessary,  patents  could  be  granted 
the  same  as  at  present.  When  such 
patents  became  public  property,  and 
the  use  became  general,  a  readjust- 
ment of  jjrice  should  take  place  ;  but 
changes  in  the  quantity  of  money  or 
certificates    of   value    could    not    affect 


136       AN  EQUITABLE  EXCHANGE  SYSTEM. 

prices  as  they  do  under  our  present 
system.  The  money  would  always 
have  a  steady  purchasing  power,  which 
Professor  Andrews  states  is  the  ideal 
sort  of  money. "^^ 

Government  employees  should  be 
paid  no  more  than  their  services 
would  command  in  other  employ- 
ments. The  reason  of  the  scramble 
for  government  offices  is  due  to  the 
fact  that  the  positions  are  steady  and 
the  pay  much  greater  than  men  can 
make  on  an  average  in  other  employ- 
ments. Opportunities  to  make  money 
corruptly  are  also  the  lure  for  some 
people. 

A  certain  class  of  men  object  to 
governmental     control.     There    seems 


*"  It  is  always  either  assumed  or  admitted  that  the  ideal 
sort  of  money  would  be  money  with  a  unit  having  a 
steadfast  general  purchasmg  power." — ("An  Honest  Dol- 
lar."— E.  B.  Andrews.) 


PLAN   IN   DETAIL.  I37 

to  be  an  Idea  that  g-overnment  is 
something  separate  and  apart  from 
the  people,  and  antagonistic  to  that 
ideal  state  of  individual  freedom  which 
they  advocate.  I  can  see  no  interfer- 
ence with  absolute  freedom,  and  the 
greatest  possible  liberty,  in  the  plan 
I  offer.  To  even  mention  government 
to  some  men  is  like  holding  up  a  red 
rag  before  an  enraged  bull.  I  believe 
in  perfect  freedom  of  action,  so  long 
as  such  freedom  does  not  interfere 
with  another's  rights.  I  object  to  one 
man  helping  himself  to  another  man's 
property. 

I  believe  that  governnmetal  owner- 
ship of  land  and  natural  monopolies 
is  the  only  way  to  secure  freedom. 
Men  see  the  tyranny  of  government 
and     the    abuse    of     power    that    has 


138       AN  EQUITABLE  EXCHANGE  SYSTEM. 

grown  up  under  a  false  industrial  sys- 
tem, and  naturally  go  to  the  other 
extreme  in  opposition. 

Under  the  plan  which  I  have  at- 
tempted to  make  clear  there  will  be 
no  surrender  of  individual  preference 
as  to  one's  work,  nor  will  any  man  be 
compelled  to  work  if  he  does  not 
want  to  ;  but  there  should  be  general 
direction  given  to  production  by 
means  of  a  statistical  board,  which 
anyone  will  admit  is  better  than  go- 
ing it  blind,  as  we  do  now. 

Whether  such  an  exchange  system, 
which  I  have  so  crudely  outlined,  will 
be  the  system  of  the  future,  or 
whether  it  will  develop  along  social- 
istic lines,  remains  to  be  seen.  But 
one  thing  is  clear.  The  present  sys- 
tem,    with     the     millions     toiling     for 


PLAN   IN   DETAIL.  1 39 

wages,  and  a  privileged  class  con- 
trolling natural  opportunities  and  com- 
pelling others  to  pay  tribute,  is 
doomed. 


I40 


STATISTICS, 


The  United  States  Census  Statistics,  1890. 


From  Chas.  B.  Spahr's  "  The  Present  Distriljution  of  Wealth 
in  the  United  States." 


Distribution  of  wealth  by  families,  five  to  a  family. 


AGGREGATE 
WEALTH. 


AVERAGE 
WEALTH. 


125,000  $33,000,000,000  ^264,000 

1.375.000  23,000,000,000  16,000 

5,500,000  8,2CO,COO,000  I,£00 

5,500,000  800,000,000  150 

SS.200 


$50,000  and  over 

5,000  to  50,000 

500  to  5,000 

Under  500 

12,500,000       $65,000,000,000 

Seven-eighths  of  the  families  hold  one-eighth  of  the  nation's 
wealth. 

One  per  cent,  of  the  families  hold  more  than  the  remaining 
ninety-nine  per  cent. 

(This  aggregate  wealth  is  now,  1898,  estimated  to  be  $72,- 
000.000,000.) 


Income  from  Labor  and  Capital  Contrasted. 


from  labor. 

lMilies  having 
income  of 

NUMBER  OF 
FAMILIES. 

AVERAGE 
INCOME  FROM 

TOTAL  FROM 
LABOR. 

;,ooo  and  over 

200,000 

fe.Soo 

$700,000,000 

1.200  to  5,000 

1,300,000 

1,200 

1,560,000,000 

Under  1,200 

11,000,000 
12,500,000 

380 

4,200,000,000 

FROM    CAPITAL. 

$5,000  and  over $2,410,000,000 

1,200  to  5,000 1,330,000,000 

Under  1,200 600,000,000 

Total  Income  from  Capital  and  Labor  ....  $10,800,000,000 

One  per  cent,  of  the  families  receive  from  capital  alone  as 
much  income  as  half  receive  from  both  capital  and  labor- 


STATISTICS.  141 

Debt  of  the  United  States,  1890. 


Estimated  by  George    K.  Holmes,  Esq.,  the   head   of  the 
Bureau  of  Mortgages. 


Funded  Debts  of  Corporations  : 

Railroads ^,631,473, iS^ 

Street  Railway  Companies 151,872,289 

Telephone  Companies 4,992,565 

Telegraph,  Water,  Gas,  and  all  others  211,661,962 

Total g5 ,000,000,000 

Real  Estate  Mortgages $6,000,000,000 

Crop  Liens  in  the  South 350,000,000 

Chattel  Mortgages 300,000,000 

National  Bank  Loans  .    .       .           1,986,058,320 

Other  Bank  Loans 1,172,918,415 

Private  Debts — Estimated 1,191,023,265 

United  States  Bonded  Indebtedness 891,960,104 

State  Bonded  Indebtedness 228,997,389 

County 145,048,045 

Municipalities 724,463,060 

School  Districts    ...       36,701,948 

Grand  Total $18,027,170,546 


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